Capital inflow continues to increase in the UAE thanks to the Emirates’ market transparency and economic stability. Positive performance of real estate over the past two years, particularly in Dubai, has driven the emirate towards further steadiness. Meanwhile, investors elsewhere in the UAE preferred to focus on the hospitality and retail sectors.
Following a period of rapid rises in prices, the government took regulatory measures to slow down further price increases. A 75% mortgage cap for expatriates and 80% for UAE nationals was issued by the UAE Central Bank, and the increase from 2% to 4% in transfer fees has also resulted in the stabilisation of property prices and limited further escalation in the residential sector.
UAE’s real estate investors are also acknowledging the growing number of tourists. The immense potential offered by Expo 2020 has lifted investors’ confidence in the country’s hospitality sector. Together with the government’s commitment to support the real estate sector’s growth, we can expect this trend to continue as investors have shown growing interest in the hospitality sector.
Let’s analyse below the performance of the two most searched emirates on Bayut.com, Dubai and Abu Dhabi. We will take a look at the market search trends on Bayut.com to find out what localities within Dubai and Abu Dhabi were the hottest in terms of both sales and rentals in 2014.
ABU DHABI SALE TRENDS
Al-Reem Island
Al-Raha Beach
Al-Reef Villas
Saadiyat Island
Al-Ghadeer
Al-Reem Island tops Abu Dhabi residents’ wish list with 16.96% of the total searches conducted for residential properties in Abu Dhabi on Bayut.com in 2014. Located off the north-eastern coast of Abu Dhabi city, Al-Reem Island is a mixed-purpose community with both residential and commercial units.
Second on the list was Al-Raha Beach, with 7.66% of the total searches. Built alongside 5.2 million square metres of natural beachfront, the Al-Raha Beach development is a mix of world-class residential, commercial, cultural, entertainment and public facilities, which will ultimately house up to 120,000 residents.
At number three on Bayut.com’s top 5 most searched localities in 2014 was Al-Reef Villas, a full-fledged residential community that is designed to accommodate over 16,000 residents. Drawing 6.02% of the total searches, Al-Reef Villas also maintained a steady position in 2014 with minor variations in the second and third quarters.
TDIC’s flagship development Saadiyat Island maintained the third place almost throughout 2014, but closed the year with 5.99%, in the fourth spot.
Al Ghadeer made it to fifth place in 2014’s most searched localities for residential properties for sale in Abu Dhabi with 4.89% of all searches. The development saw a significant increase in investor interest in Q3 2014, which marginally declined towards the end of the year.
ABU DHABI RENTAL TRENDS
Al-Reem Island
Khalifa City A
Al-Raha Beach
Al-Muroor
Al-Reef Villas
Al-Reem Islandwas the most popular locality in Abu Dhabi not just for investment, but also for rent. It retained the top spot with 6.26% of all searches for residential properties for rent in Abu Dhabi almost throughout 2014, only briefly giving up first place to Khalifa City A in the beginning of Q3.
Khalifa City A gave tough competition to Al-Reem Island in 2014, accounting for 5.97% of all rental searches in Abu Dhabi. The third spot was taken by Al-Raha Beach with 3.56% of the total searches for rental properties in Abu Dhabi.
With a steady fourth position throughout the first and second quarters of 2014, Al-Muroorsaw a brief jump to third place in Q3 but was relegated to fourth place by the end of the year, pulling 2.64% of all rental searches in Abu Dhabi in 2014.
One of the most prestigious locations of Abu Dhabi, Al-Reef Villas,came in fifth on the list of the most searched for locations for rental properties in Abu Dhabi. With 2.26% of all rental property searches within Abu Dhabi, Al-Reef remained in tough competition with Al-Muroor till the end of the year.
DUBAI SALE TRENDS
Dubai Marina
Downtown Dubai
Jumeirah Lake Towers
Dubai Sports City
Business Bay
As the new year progresses, Dubai Marina continues to occupy the first position on Bayut.com’s list of the most popular localities in Dubai. On Bayut.com, 11.91% of the total searches for properties for sale in Dubai were made for Dubai Marina in 2014. This awe-inspiring city within a city continues to delight residents with its cosmopolitan, free-spirited atmosphere and unique, invigorating lifestyle.
Downtown Dubai – home to the world’s tallest building and the largest shopping mall ever made – came in second with 6.89% of the total searches. Downtown Dubai has truly managed to become the centre of Dubai, and was especially so on New Year’s Eve when people from all over the world gathered around the Burj Khalifa to count down to the start of the New Year and witness jaw-dropping fireworks.
Jumeirah Lake Towers came in third with 5.42% of the total searches made for residential property for sale in Dubai. Situated in the heart of New Dubai on Sheikh Zayed Road and between two metro stations, JLT continues to be the ideal address for many in Dubai.
In fourth place, Dubai Sports City showed up in 4.73% of the total searches conducted for residential property for sale in Dubai. This regional and global tourism hub will continue to draw and host diverse attractions scheduled to open in the coming years, reinforcing Dubai’s position as an international hub for tourism.
Business Bay closed the year with 3.22% of the total searches on Bayut.com, making it the fifth most searched locality of Dubai, in 2014.
DUBAI RENTAL TRENDS
Dubai Marina
Jumeirah Lake Towers
Bur Dubai
Downtown Dubai
Business Bay
Predictably, Dubai Marina took the first place as the most searched locality on Bayut.com for residential properties for rent in 2014. Pulling 10.75% of the total searches, Dubai Marina is undoubtedly the favourite locality of the emirate’s residents.
The second most searched locality on Bayut.com in 2014 was Jumeirah Lake Towers, with 4.81% of the total searches for rental properties in Dubai going its way throughout the year. Compared to 2013’s 5%, there was negligible difference in JLT’s popularity among renters.
In third place, Bur Dubai gained more popularity among Dubai’s residents in 2014 with 4.42% of the total searches on Bayut.com, compared to 3% in 2013. With ideal rents for families, couples and singles on a budget, Bur Dubai is also ideally located and can be easily accessed from anywhere in Dubai.
According to search trends on the UAE’s leading property portal, one of the world’s most exclusive addresses to call home has seen a slightly loss in interest from tenants. In fourth place with 4.20% of rental searches going its way in 2014, Downtown Dubai did not perform as well as it had done in 2013, when it appeared in 5.2% of the total rental searches in Dubai.
In fifth place, Business Bay saw no change in search trends since 2013 and pulled a steady 3.03% of searches for residential properties for rent in 2014.
FINAL ANALYSIS
“A decade from now, when looking back, 2015 will be the year that the emirate’s real estate market started to truly mature”, said Mr Haider Ali Khan, CEO Bayut.com.
According to the Dubai Land Department (DLD), transactions came down 50% in May 2014 as compared to the same time in 2013. However, despite the announcements of new projects that raised concerns of supply outstripping demand, 2014 saw balanced activity from both, investors and developers.
“The recovery in real estate prices, a bounce in bank financing for construction, and the return of off-plan sales in particular have motivated developers to resume the projects that were on hold in both Abu Dhabi and Dubai,” said Mr Khan.
“However, there are still concerns that returning speculation, including through off-plan sales, could make Dubai head towards excessive price growth and rapid over-development. The year 2015 will see a balance in supply and demand if the number of new households continues to grow around the recent rates. This would underpin the recent price gains, but suggest more moderate increases,” he added.
Another important factor to consider is investment from foreigners. Foreigners account for a major chunk of the Emirates’ real estate investment, and much will depend on future demand from foreign buyers. Foreign investors were responsible for nearly half of 2014’s real estate transactions, with investment totalling AED 113 billion according to the DLD. The three top investors by nationality were Indians (AED 10 billion), Britons (AED 5 billion) and Pakistanis (AED 4.5), while GCC nationals together accounted for AED 33 billion.