Dubai’s real estate market witnessed further stabilisation and a slowing down of both property prices and rental rates in the third quarter, a far cry from the abnormal price hikes the UAE emirate had experienced in the last 18 months, said a report.

The property market slowdown actually stabilised the rents and property prices in most locations across Dubai, according to real estate experts at Bayut.com.

While there were fewer properties changing hands in the third quarter, the developers continued to launch new projects, many of which were unveiled at the recent Cityscape Global 2014 event, said the experts.

But since these new projects are scheduled for delivery over a longer time frame, they do not have any significant impact on the supply as yet, they added.

If the government’s estimates of a significant rise in population by 2020 hold true, Bayut.com believes that the emirate will not see supply outstripping demand.

According to Bayut.com, the average residential rents in Dubai have been consistently inching up for well over two years, but the third quarter came with a slight twist.

The average rents actually dropped in this quarter, though only by a minute 0.93 per cent overall, owing primarily to the influx of new residential units and the long holiday period, it stated.

Exceptions to this general decline existed in the form of Dubai Marina and The Greens, where rents remained stable during the period and also some areas saw declines that were greater than the average.

Downtown Dubai and Tecom C saw a drop of 2.87 per cent in rental values, while rents in International City, Business Bay and Jumeirah Lakes Towers (JLT) underwent a 1.82 per cent decline.

According to the database of Bayut.com, the quarter began with Dubai Marina as the most-searched locality for rentals in Dubai, followed by JLT, Al Barsha, Downtown Dubai and Business Bay respectively.

In August, Dubai Marina once again topped the list, followed by Downtown Dubai, JLT, Al Barsha and Dubailand. Dubai Marina remained the favourite in September as well, while JLT climbed its way back up to second place, followed by Downtown Dubai, Al Barsha and Dubailand, the report added.

Thanks to tighter regulations by the government and the rather careful behaviour of property developers, the residential sector of Dubai is sailing safely into much-awaited stability, said Bayut.com.

Even though property prices skyrocketed in the previous year and rang all sorts of alarm bells from the International Monetary Fund (IMF) to the World Bank, 2014 has had a grounding effect on the market, it added.

In the third quarter of 2014, Bayut.com noticed tamer growth, with average sale prices rising by a mere 1.5 per cent. Even the announcements of new projects at Cityscape Global 2014 did not have a significant impact on the overall price trends because their delivery is still a few years away.

According to experts, stricter regulations and a healthy pipeline of residential and commercial properties are expected to stem rental inflation.

With an eye on previous announcements of realty projects, Bayut.com expects around 19,000 new units to enter the market over the next year. A lot of these units are likely to come from Dubailand in light of the sale and rental search trends recorded by Bayut.com.

On Abu Dhabi property scenario, Bayut.com said the UAE capital was emerging a strong and healthy residential market along with an improving commercial sector.

Positive sentiments from investors and the increase in the emirate’s population were seen to be working wonders for its realty market during the third quarter. Many people showed interest in Abu Dhabi’s residential sector, according to the search trends of Bayut.com.

The capital’s occupancy rate is improving swiftly, and this was reflected in the ever-increasing list of properties that have been sold or rented out on Bayut.com.

Unwavering investor interest managed to keep all sectors of the property market going strong in Abu Dhabi. Owing to abundant supply in the third quarter, the average rents of prime residential space remained stable during the period at Dh160,000 ($43,549) per year.

The most popular locality was Khalifa City A at the start of the third quarter, followed by Al Reem Island, Al Raha Beach, Al Muroor and Al Khalidiyah, said Bayut.com.

However, the month of August saw a better performing Al Reem Island claim the top spot, followed by Khalifa City A, Al Raha Beach, Al Muroor and Al Khalidiyah, and September brought no changes to the top five rankings.

For the third quarter, the most popular rental apartments in Al Reem Island were those in Shams Gate District, followed by those in Marina Square and Shams Abu Dhabi, it added.

Thanks to the increased residential stock of an estimated 242,000 units, the residential sales market remained strong throughout the quarter.

The sale prices for villas and apartments increased by 5.83 per cent near the end of September, and the demand for residential property remained strong in all sectors of the market, the report added.

On the 2014 outlook, the experts said the property market of the UAE seemed to be gaining some well-earned stability as a result of prudent steps from its regulatory authorities as well as the sensible conduct of developers this time around.

If things continue as they are, this will spell a brighter future for the realty sector of the UAE, they added.  

Bayut.com CEO Haider Khan said: "The UAE market is headed for broader stability. Over the next few months, there will be correction in areas overvalued, at the same time, there will exist pockets which will maintain their upwards climb."

He pointed out that this, in due course, should draw comparisons to more mature property markets of the world.

Over the third quarter, the Dubai real estate market saw an evening out of all the abnormal price hikes it had experienced in the previous 18 months. During the summer, the market saw fewer transactions and in some locations the rentals slowed down as well.

"This tightening of regulations and policies will serve as a great confidence booster for individuals and corporations investing in the UAE and will result in overall betterment of the industry," stated Khan.

"The consumers should expect better customer service and the brokerages will need to step it up a notch and provide a great experience to end customers. The sooner agencies adapt to this idea, the brighter their prospects get in terms of being the long-term winners in this market," he added.-TradeArabia News Service