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Rents, sales and prices record moderate falls in Dubai in first quarter of 2016
The Dubai residential real estate market is experiencing moderate declines in rents and sales prices and transaction volumes are also down, according to the latest UAE property review. The analysis report from Asteco suggests that a focus on affordability is becoming more prominent in the emirate’s real estate market. Whilst no significant rent reductions were recorded during the first quarter of the year this may have been due to limited supply and the general trend continued to be towards increased competition amongst landlords. Leasing demand was stable in the first two months of 2016, however, a slowdown was recorded from March onwards, especially for more expensive properties where take-up was slower than usual. On average, rental rates stabilised in the affordable segment, and declined by 2% and 3% for mid and high end apartments, respectively. Asteco says that this minimal decrease was due to a combination of landlords trying to retain tenants rather than insisting on higher renewal rates, a decrease in the number of newcomers to the city, and in some sectors, housing allowance cuts and redundancies. Compared to the previous quarter, sales prices remained stable, with the exception of high end apartments and villas where 2% average declines for both markets were recorded. However, according to the Dubai Land Department (DLD), the first quarter of 2016 was considerably worse than the first quarter of 2015 as the overall residential transactions by total value were down by 25%, transaction numbers by 17% and the average sales price by 11%. Leasing activity at the beginning of the year started well, however, enquiry and transaction levels tapered off in March. The report suggests this was partially due to property owners keen to retain their existing tenants, and therefore willing to negotiate rental rates instead of having a property vacant. As a result, fewer tenants were seeking to move to a new unit. Asteco also noted a tendency for the more expensive units in buildings to remain vacant for longer, as tenants became more conscious of their spending habits. Whilst declines were limited over the quarter, year on year comparisons indicated an average of a 4% decline across the board. The most affected areas were those that had seen previous rapid rental increases for a relatively undifferentiated product. For instance, Jumeirah Lake Towers recorded a 12% decline year on year. ‘Indeed, whilst the community is attractive overall, the quality of most residential towers are below the tenant’s expectations considering the high rental levels. We have noted an increase in demand for affordable units. However, rental rates have not fallen far enough to warrant tenants to relocate from the Northern Emirates to Dubai yet,’ the report points out. ‘This is further compounded by the fact that for a similar priced product in the Northern Emirates would equate to a much smaller unit in Dubai. For instance, AED60,000 would mean a two bedroom unit in Sharjah as opposed to a studio or a small… Continue reading
Demand from buyers in UK falls to two year low
Demand for housing in the UK is at its lowest level in two years with the number of house hunters making enquiries down by a fifth in April, new research shows. Estate agents also reported that the number of sales made to first time buyers fell in April. The April Housing Market report from the National Association of Estate Agents (NAEA) shows there were 325 house hunters registered per member branch on average last month. This was the lowest number recorded since March 2014, when there were 313 house buyers recorded at each estate agent branch. This means demand has decreased by 22% from 417 in March. Last month, the supply of houses available for buyers also decreased by 35% from 54 properties available in March to 35 in April. Some 26% of the total sales made in April were to first time buyers, a decrease of 2% compared to March. However, some 33% of estate agents expect sales to this group to increase following the buy to let stamp duty changes as buy to let landlords exit the market, potentially freeing up properties for first time buyers. The monthly research also found that 24% of estate agents expect house prices to decrease and a further 23% expect demand to decrease if Britain votes to leave the European Union in the referendum on 23 June. Indeed, a recent Brexit report from the NAEA and that Association of Residential Letting Agents (ARLA) revealed that by 2018, a Brexit would reduce the average UK house price by £2,300 to £300,900. However, if Britain remains in the EU, the average UK home could cost £303,000 by 2018. ‘It’s no surprise that demand dropped significantly in April. Some 80% of agents saw an increase in purchasers trying to beat the buy to let stamp duty changes before the 01 April deadline, so we expected to see a slow down immediately following the deadline,’ said NEA managing director Mark Hayward. ‘Whilst the number of house hunters registered per branch dropped in April, the supply of available housing to buy also fell quite sharply, so supply and demand are still moving in the opposite direction, rather than balancing out,’ he explained. ‘Additionally, the upcoming EU Referendum means we’ve entered a period of uncertainty, as buyers put off their hunt in anticipation of the result, and what might happen to prices as a result,’ he added. Continue reading
Second home owners returning to Portugal, particularly the Algarve
The availability of cheap finance, investment in infrastructure, appealing tax initiatives and a return to sensible pricing has prompted renewed activity in the Algarve’s property market. Overall, the Portuguese property market’s decline since the economic downturn of 2008 is well documented. Prices in some locations popular with overseas buyers have fallen by as much as 50% in peak to trough terms. But sales volumes and prices have responded, albeit in two phases, according to the latest analysis from international real estate firm Knight Frank. In 2013 the firm saw vendors start to adjust their prices, which led to an upturn in transactions. By 2015 the Algarve recorded its first annual increase in prime prices since 2008 and Knight Frank’s west Algarve office reported a 32% increase in sales in 2015 compared to 2014. The report says that what set the Algarve apart during the downturn was the continual investment in infrastructure. The upgrade of the coastal A22 motorway, for example, has opened up the western Algarve while the improvement to the E1 from Lisbon and Porto and the €32 million expansion of Faro Airport have helped boost economic confidence. Further development is planned at Vilamoura and Quinta do Lago. The report points out that British, Irish and German buyers are still evident in the Algarve but French, Scandinavian and non- Europeans, including South Africans and Chinese, are also increasing in number. A surge in French interest has been seen in the last two to three years with many citing Portugal’s Non-Habitual Tax Residency regime (NHR) as a key incentive. Introduced in 2009, the NHR exempts non-residents spending 183 days a year in Portugal, or those with a primary residence in the country, from income tax on non-Portuguese incomes, including pensions, salaries and capital gains for a period of 10 years. Another initiative, Portugal’s Golden Visa, by far the most successful of the European schemes in existence, has seen inward investment focus on the Lisbon area rather than on the Algarve. To date Chinese buyers account for 79% of the 2,853 visas granted since 2012. The report also points out that there is now a greater focus on the Algarve’s investment potential compared with before 2008. The Algarve’s 37 championship golf courses are responsible for over 50,000 rounds of golf a year and their season extends beyond that of the traditional summer rental period, running from February to May and again from September to November. And it adds that new development is evident once more particularly at the eastern end of the Algarve, but prime projects need to be anchored by a 5-star hotel brand or a championship golf course to pull buyers away from the more established locations such as the Golden Triangle area which stretches from Quinta do Lago to Vilamoura and Vale do Lobo. Continue reading
