Property prices and rents holding steady in the Gulf region
Residential property prices in Dubai have increased 1.5% year on year, led by villas, with apartment seeing prices grow at a slower rate, according to the latest index.
Apartment prices increased by just 0.8% compared with a year ago in March but increased 1.74% month on month, the data from ReidIn shows. Villa prices were up 4.5% year on year but month on month fell by 0.24%.
The data also shows that rental prices fell by 0.29% but have increased 5.4% year on year. A breakdown of the figures shows that apartment rents decreased 0.2% on a monthly basis but are up 6.3% year on year. Villa rents have been much more stable in the last 12 months, up by 1% year on year and down by 0.25% month on month.
Meanwhile, in neighbouring Abu Dhabi prices fell by of 0.48% in March 2015 but were up 0.4% compared to March 2014. Apartment prices were down 0.60% month on month and decreased 1.8% year on year while villa prices fell 0.4& compared to February but increased 0.9% year on year.
In the rental market prices fell 0.75% in March but are still up 2% compared to March 2014. Apartment rents were down 0.45% month on month and down 2.6% year on year while villa rents fell 1.04% month on month but are up 4.7% year on year.
Elsewhere in the Gulf region the Saudi Arabian market has seen variable real estate performance. Over the past year, residential prices in Riyadh have risen by 5% to 7% overall but there have been variable performances across the capital’s districts, according to the latest report from international real estate firm Knight Frank.
It says that congestion issues in the south, for example, have resulted in prices stagnating while in the north, which has seen notable development activity, prices have increased by around 9%.
‘In the short to medium term, with new supply unlikely to be able to fully offset pent-up demand, we expect residential prices to continue to move in an upward direction,’ said Stefan Burch, Knight Frank partner for Saudi Arabia advisory services.
The report points out that in recent year Saudi Arabia’s residential construction sector has been expanding rapidly. Indeed, the latest available data shows that the value of residential building construction across the kingdom rose for the ninth consecutive year in 2012, increasing by 11.4% year on year to SAR95.6 billion.
‘Not surprisingly, Riyadh is an important driver of construction activity in Saudi Arabia. The capital accounted for an average of 27% of all residential and commercial permits issued across the kingdom between 2003 and 2013. Moreover, the number of permits issued in the capital rose by 319% over the 10 year period, outperforming Saudi Arabia as a whole, which experienced a 215% increase,’ explained Burch.
Despite rising development activity however, demand for residential units continues to outstrip supply in Riyadh. Indeed, the capital has a requirement for around 50,000 housing units per annum over the next five years and has an estimated housing inventory of just 1.15 million units.