Dees Stribling, Contributing Editor
Dubai, UAE–Infamous for how far its property markets have fallen in recent years, the emirate of Dubai is seeing signs that its multifamily market, at least, has touched bottom. According to Asteco, one of the largest property services companies in the Middle East, the average sales price of completed apartment units in Dubai didn’t change in either the third or fourth quarters of 2009.
For all of 2009, prices dropped considerably, on top of a decline the year before, so two quarters of no change might indicate some stabilization. In its most recent report on the market, Asteco noted that the average selling price of apartments in Dubai stood at AED 950 (about $258) per square foot at the end in 2009, a decrease by 16 percent since the beginning of the year, all of which happened in the first half.
Among the more notable Dubai developments that Asteco tracks, properties on the Palm Jumeirah–the first of three palm-shaped manmade islands developed by the government-owned Nakheel–maintained their valuation better than other parts of the emirate (though the island includes a variety of residential properties called “villas” as well as apartment buildings). The island’s status as a well-known international resort destination has helped keep Palm Jumeirah prices stable, according to Asteco.
Multifamily rental rates have declined in Dubai in recent years as well, though it isn’t clear yet how stable they have become. In the longer run, however, Asteco CEO Elaine Jones, notes that rates tend to fluctuate with the global economy.
“We have been involved with many of the buildings that have shaped and defined Dubai and the UAE, and the ups and downs of these property prices provide the documentary evidence that we are living in a global village,” she says.
The most recent spike in the price of oil, peaking in mid-2008 just ahead of the worldwide recession, saw rental rates in the emirate peak as well. In mid-2008, rents for studio apartments in Dubai averaged AED 36,000 ($9,800) per year – almost AED 17,500 more than the previous year. “For many it was a question of a studio apartment being all they could afford at a time of high rents all round,” says Jones. “That combined with many expatriates sending their families home to save money by giving up larger apartments.”
These days, apartments in Dubai are considerably more affordable, with rents driven down by the global recession finally reaching the region, relatively low oil prices, and the all-around bursting of the Dubai property bubble. “Today, the annual market rents for the studios are an affordable AED 24,000,” says Jones.