The UAE residential property sector had witnessed significant activity in the first quarter with the villa market rental rates in Abu Dhabi and Dubai posting a slight increase despite the ongoing economic challenges and Covid-19 concerns, according to property management expert Asteco.

 

The Abu Dhabi residential market had delivered 1,700 apartments and 50 villas during the first quarter amid growing demand for villas, particularly within well-developed villa communities such as Yas Island, Al Raha Beach, Saadiyat Island as well as the Al Reef community. 

 

Although average villa rental rates remained more or less unchanged over Q1, there was a significant increase in rents for West Yas, Golf Gardens and Saadiyat Beach Villas, mainly driven by a surge in demand within well-developed villa communities - mature and emerging, it stated.

 

According to the report, demand for completed villas for sale remained high in Q1, predominantly driven by the limited availability of quality properties offered at attractive prices. 

 

Affordable communities such as Al Reef also noted heightened interest and hence an average quarterly rise in sales prices of 7%. Conversely, apartment sales prices remained broadly unchanged over the last three months due to limited demand in this sector, it stated.

 

Although the average rental market for residential properties remained relatively stable in Q1, with a large majority of tenants looking to upgrade or upsize due to increased affordability within the mid to high-end sector and the continued incentives offered by landlords, the office sector remained one of the most challenged asset classes in the emirate. 

 

Landlords also increasingly offered incentives related to payment and lease terms. Several Grade A and B office buildings experienced a rise in demand from Chinese and Israeli companies looking to establish a base in Abu Dhabi. 

 

The report indicated that no large-scale villa developments were handed over during the first three months of 2021 in Dubai, while apartment supply stood at nearly 2,000 units with notable deliveries in emerging communities such as Dubai Hills Estate and Dubai Creek Harbour. Office completions were marginal at 70,000 sq. ft. of space.

 

According to Asteco, the rental market in Dubai during the first quarter for apartments and villas increased, with average rental rates growing by 1% and 4 % respectively. However, rates were still 10% and 2% less for apartments and villas when compared to the same period last year.

 

The surge in demand for villas can be attributed to changing working and living habits. Office rental rates continued their downward trajectory with quarterly and annual drops of -3% and -18%.

 

Similar to the rental market, the current situation has also affected sales prices to varying degrees with an average quarterly growth of 3% for apartments and 6% for villas. 

 

Although the impact on investment properties (educational, hospitality, and offices) has seen less activity, the villa segment witnessed a marked increase, stated the industry expert. 

 

For example, villa sales prices in Arabian Ranches, Meadows and Springs rose by 9% on average over the quarter. Apartment sales also fared better with quarterly increases of 5% in Jumeriah Village and Dubai Sports City, it added.