In a situation where the inventory is swelling, prospective house hunters in Dubai appear to have everything going in their favour. On the one hand, prices and rentals are becoming incredibly attractive while on the other, there are plenty of units to choose from in some of the best locations.
When it comes to location, Dubai Marina tops the list of most sought-after developments in Dubai for renters and buyers alike, as per a survey conducted by real estate website propertyfinder.ae. The survey was conducted among 400,000 visitors to the website, 100,000 properties and 200 brokers.
While 17.5 per cent of the people searching for a pad online chose Dubai Marina, 16.1 per cent opted for Jumeirah Lakes Towers (JLT), 13.1 per cent chose Palm Jumeirah, followed by Jumeirah Beach Residence (7.3 per cent) and Arabian Ranches (6.8 per cent). In the rental sector as well, Dubai Marina made its presence felt with 16.7 per cent choosing it as a favoured development. In the rental destinations list, Dubai Marina was followed by JLT (9.9 per cent), Palm Jumeirah (6.7 per cent), Mirdif (5.9 per cent) and Jumeirah (5.9 per cent).
Once popular rental destinations Discovery Gardens and International City continued their downward journey, with only 4.2 per cent and 3.4 per cent showing interest in them, respectively.
The popularity of Dubai Marina is bolstered significantly by demand from Abu Dhabi commuters because the real estate sector in the capital has been set back by shortage of units resulting in high rents, says Jesse Downs, director of research and advisory, Landmark Advisory. Also, "The blend of waterfront location with access to key retail clusters makes the Dubai Marina a popular residential area. The Marina is also an established community, which has created a positive feedback loop, drawing in more demand."
However, despite being the most popular development, rents in Dubai Marina registered a 20 per cent dip, according to the Rental Index published by the Real Estate Regulatory Agency. For a studio in Dubai Marina, rents range from Dh40,000 per annum, a decline of Dh5,000 vis-à-vis the March index, while one-bedroom apartment rents fell by over 20 per cent to Dh55,000.
"At the moment, rent declines are driven by supply growth and weak demand fundamentals. Supply in the Marina, including Jumeirah Beach Residences, has increased approximately 20 per cent this year alone. There is a significant three-year pipeline for the area, which will keep rents from rebounding in the near future," says Downs.
Supply pipeline of mixed quality
Quality, however, remains key. Eventually, it will be buildings with better build that will attract attention.
"Based on our assessment of quality, there are relatively few high quality units in Marina and cost-cutting measures put in place by developers in 2009-2010 indicate mixed quality of upcoming supply as well. It's our assessment that the few high quality apartments, which have much lower downside risk, will experience relatively limited volatility and will recover first," says Downs.
"Sales prices of units in the Dubai Marina range from Dh700 to Dh1,100 per square foot — of course, there may be a few exceptions," he adds.
With many projects nearing completion and close to handover in Abu Dhabi, it is expected that many people working in Abu Dhabi and living in Dubai will consider moving to the capital. "We do think the upcoming supply deliveries and falling rents in Abu Dhabi will gradually attract commuters back to the capital. Although there is primarily evidence suggesting this is already starting, the trend will probably gain momentum in 2011 and 2012. This will have the greatest impact on areas like Dubai Marina and JLT."
Dubai Marina currently has buildings of all qualities. Rents and sales prices vary considerably, depending on the quality of the building. Downs says the wide variety of quality available in the Marina is clearly reflected in the wide ranges of sales prices and rents. "Prices and rents are a function of supply and demand. As it's a buyers and tenants market now, price and rent trends are driven by individual preferences," she concludes.
not immune to rent dip
Rents in Dubai Marina registered a 20 per cent dip, according to the Rental Index published by Rera. "Rent declines are driven by supply growth and weak demand. There is a significant three-year pipeline for the area," says Jesse Downs.
