The United Arab Emirates (UAE) are expecting a wave of new residential construction to be completed that will push the existing market into a state of oversupply, and experts predict the result will be stagnating or sinking prices and rents. Property advisor Tasweek reports that both Abu Dhabi and Dubai will face similar fates, although prime locations in Dubai are expected to fair somewhat better. Experts say oversupply isn’t the only issue, and that many investors are being drawn away by deals in the Eurozone as its various markets struggle under the weight of the debt crisis. For more on this continue reading the following article from Property Wire.
New properties coming on stream are expected to keep house prices and rents in the United Arab Emirates subdued and under pressure, it is claimed.
According to a new report from property advisor Tasweek only sought after locations in Dubai is likely to see any improvement because of the sheer number of releases in the real estate market.
Abu Dhabi is likely to see house prices and rents drop by between 2% and 10% while in Dubai less p-popular locations could see falls of 2% to 5%.
Some 2,900 units have been released in Abu Dhabi in the second quarter of this year and stocks are currently at around 199,800 units, Tasweek said in its report.
Masood Al Awar, chief executive officer of Tasweek, said that the expected shift in demand to distressed eurozone countries could further impact the UAE market as more real estate investors from the region are eyeing European bargains in light of the continent’s economic pressures.
It said that Dubai International Financial Centre (DIFC) currently commands the highest average annual rents in the emirate, starting at AED75,000 for a studio, going up to AED230,000 for three bedroom units.
Downtown Dubai rental values have also performed strongly while bargains can be had at International City, where average annual payments start at AED21,500 for a studio. Dubai Silicon Oasis also offered some of the cheapest rates of AED24,000 for a studio.
‘With the exception of a slight rally observed in some of Dubai’s prime locations, real estate recovery is pressurising property prices in general continue to fluctuate in Abu Dhabi and Dubai as more units continue to be added to the existing market inventories,’ the report points out.
Tasweek, a provider of real estate development solutions for the UAE and the Middle East, manages properties for over 25,000 customers in the region.
This article was republished with permission from Property Wire.