UAE's new property launches pick up in the first quarter

Projects to come are mainly from top-tier and master developers, says a report by Asteco

New project launches in UAE are picked up in Q1 2019, Asteco said. Mona Al Marzooqi / The National

New project launches in the UAE started to pick up in the first quarter after slowing down at the end of last year, according to a new report by property services company Asteco.

“This trend is somewhat surprising given prevailing oversupply concerns,” said John Stevens, managing director of Asteco.

New supply of apartments and villas is increasing with the delivery of about 6,700 residential units in Dubai and 3,600 properties in Abu Dhabi, Asteco said in its UAE Real Estate Report for the first quarter, released ahead of Cityscape Abu Dhabi later this week. The supply doubled because of previously delayed projects being handed over and the increased delivery of properties with extensive post-completion payment plans.

The delivery of commercial units in Dubai was "limited" but is expected to pick up with the upcoming release of more than 750,000 square feet of office space in Silicon Park, the report said. Office completions in Abu Dhabi included Al Jewn Tower in Danet Abu Dhabi.

Due to this new inventory coming into the market, rental rates and sales prices recorded further declines across the emirates, Asteco said.

Dubai rental rates dropped by 3 per cent for apartments, 3 per cent for villas and 2 per cent for offices over the last quarter, the report showed.

Sales prices declined by 2 per cent to 4 per cent during first quarter of 2019.

"Interest in off-plan projects as well as secondary properties was somewhat buoyant, aided by competitive, more affordable pricing and attractive payment plans," the report said.

In Abu Dhabi, apartment and villa rents decreased by 2 per cent and 1 per cent, respectively, on average in the first quarter of the year, and 9 per cent and 5 per cent over the year, Mr Stevens said.

Overall apartment rental rates in the Northern Emirates contracted by 3 per cent in the first quarter and 11 per cent year-on-year. High-end properties in Sharjah and Ajman proved to be the most resilient with marginal quarterly decreases of 1 per cent and 2 per cent.

Initiatives such as long-term visas for investors and certain professionals, combined with proposed 100 per cent ownership of companies outside free zones, increased federal and local budgets, stimulus packages, diversification strategies and reduced cost of doing business are all expected to increase investment and facilitate economic growth in the medium- to long-term, Asteco said.

"In the meantime, the real estate market is expected to come under further pressure until economic conditions improve."

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UAE megaprojects 2019: new developments in Abu Dhabi and Dubai