Asteco Dubai Q4 Report 2010

Asteco Dubai Q4 Report 2010.pdf

Dubai tenants in ‘flight to quality’

Dubai tenants in ‘flight to quality’

Increased supply of high quality stock at affordable rates moves tenants – apartment rents record lowest Q-on-Q fall in 2010 indicating signs of stability says Asteco Q4 2010 report

According to the latest report by leading Dubai-based property management company Asteco, an increased supply of high quality, affordable accommodation, particularly in the apartment sector provided the catalyst for considerable tenant movement across Dubai in Q4 2010. In addition apartment rental rates declined by just 3% during the same period, the lowest quarter-on-quarter fall during the year, an indication that the market is showing signs of stabilisation.

“The real estate market is characterised by a large supply of high quality stock at affordable rates, leading to a flight-to-quality trend currently seen across Dubai. Apartment rates have dropped 17% on average during 2010 and this has brought a number of upscale developments within the reach of mid-income budgets,” commented Elaine Jones, CEO, Asteco Property Management.

Indeed although apartment rental rates fell last year, it was still less than the 24% rents fell in 2009, further indication that market prices are stabilising. According to the report, International City has seen the largest drop due to tenants migrating to better quality developments in more desirable locations. Overall studios experienced the lowest decline and one-bedroom apartments suffered the largest fall.

“Rents are expected to continue their downward trend in 2011, albeit at a lower rate as more supply enters the market, providing prospective tenants with even greater choice,” added Jones.

Villa rental rates fared better than apartments in Q4 2010, falling by just 1% over the three month period, primarily due to the limited availability in central areas. Quality communities such as Palm Jumeirah and Jumeirah Islands performed better than more mature developments such as The Springs and The Meadows.

Unsurprisingly, office rental rates fell by 8% in Q4 2010. DIFC set the tone by reducing their rates per square foot from AED370 in the first quarter of 2010 to AED230 in Q4 (a fall of 22%) in an attempt to compete more favourably with quality developments on Sheikh Zayed Road such as Rolex Tower and Sama Tower.

Continued delivery of new stock in JLT and Tecom sent rents down by 20% and 12% respectively. Although transaction activity has picked up due to the improving economy, continued oversupply will no doubt put further downward pressure on rental rates. In contrast office sales prices only declined by 6% in Q4 and just 8% during the whole of 2010, predominantly due to weak transaction activity. Prices will remain subdued due to a lack of investor confidence.

Apartment sales prices slipped by only 2% on average suggesting a slowdown in the rate of decline. Continuous delivery has seen average sales prices in Dubai drop by AED100 to AED850 over the past year, while prices in International City and Discovery Gardens have fallen to AED350 and AED450 per square foot respectively. Sales prices on Palm Jumeirah were flat in Q4 but still command one of the highest prices at around AED1,500 per square foot.

Villa sales prices in Q4 meanwhile were relatively stable with only the Springs experiencing a 4% fall. Overall market prices fell just 8% in 2010, with downward pressure more predominant in developments with a large inventory, such as The Springs and the Arabian Ranches. Market demand continues for smaller units, driven by affordability.

For more details, please visit www.asteco.com

About Asteco
Asteco, a major regional and international real estate services firm and the largest property services company in the United Arab Emirates, was founded in Dubai in 1985. Asteco offers independent market analysis, design development consultancy and valuation services, sales and leasing services, as well as asset and property management services.

Asteco:Affordable homes gain traction in Dubai

Affordable homes gain traction in Dubai

Asteco Q3 report finds lower-end stability across the city but high-end property sales and rents nudged down 4% and 6% respectively – office tenants defer decisions

Sale prices in a number of freehold communities across Dubai remained stable in Q3 this year compared to the previous three months, according to the latest report by leading Dubai-based property management company Asteco.

The Asteco Dubai Q3 Report 2010 published today (2 October 2010), revealed that, although further price adjustments are expected in the near future, affordable apartment developments, such as Discovery Gardens and Jumeirah Lake Towers (JLT) remained at AED 500 and AED 750 per sq ft respectively for the three months to the end of September.

“Asteco has recorded an average drop of 6% for [apartments]. This is mainly attributed to the increasing supply of apartments. However, we have also seen increased sales activity, predominantly due to owners who are expected to take handover of their unit but are unable to make the final payment, which often constitutes a large percentage of the overall sales price,” said the report.

This trend was also mirrored within Downtown Burj Dubai, which despite being at the opposite end of the price spectrum still commanded AED 1,300 per sq ft throughout the same period.

Despite demand for townhouses and smaller villas picking up speed – a trend Asteco expects to continue in the short-to-medium term – during Q3 it was properties in Emirates Hills, Jumeirah Islands and the Green Community that remained unchanged price-wise at AED 1,600, AED 950 and AED 700 per sq ft respectively.

“There has been a change in focus in the real estate sector as maximising rental yields and long-term capital appreciation takes precedence over short-term sale profits, with pro-active property management being a key factor,” said Elaine Jones, CEO, Asteco Property Management.

The rental market in Dubai has followed much the same pattern as the sales sector with price shifts favouring tenants.

Despite an overall apartment rental contraction of 6%, units in JLT slid just 2% with 3% adjustments in Discovery Gardens and Downtown Burj Dubai.

“The number of transactions, which are generally at their lowest during the summer and Ramadan, has been surprisingly active with a number of people taking advantage of the quiet months to look for value for money accommodation. Therefore, the drop in rents has proved to be less significant than in Q2. Although further declines across the board cannot be ruled out, the drop in [Discovery Gardens and JLT] is expected to be less noteworthy due to the already lower rents,” explained the report.

The villa rental market fared slightly better with average declines of just 4% over Q2 on the back on increased stock coming on the market in out-of-town developments in Dubailand and Dubai Silicon Oasis. Despite this, rates in the Green Community and on Palm Jumeirah remained unchanged with the market expected to gain momentum in the coming months as tenants look to upgrade from apartments.

“With an increase in activity over the summer, we expect this momentum to continue in Q4 2010 with expected demand predominantly coming from tenants looking to move from apartments to villas as rental levels continue to adjust. Villa rental rates seem to be more robust compared with apartments, which in part has to do with the fact that the current and future supply of villas is marginal compared to apartments,” said the report.

Meanwhile, the office market completed a relatively positive quarter in Dubai with average contractions of just 3% in the rental sector. But while small businesses have moved out of Dubai Internet and Media cities over the past three months, others are deferring decisions until Q4 as long-term downward pressure is likely within the planned supply.

“Long-term anchor tenants are expected to renegotiate lower rental rates whilst minimal relocation demand exists, however this will be tested as new supply enters the market and companies take advantage of better locations and facilities,” added the report.

For more details, please visit www.asteco.com

About Asteco
Asteco, a major regional and international real estate services firm and the largest property services company in the United Arab Emirates, was founded in Dubai in 1985. Asteco offers independent market analysis, design development consultancy and valuation services, sales and leasing services, as well as asset and property management services.

Ibn Battuta Gate offers holistic living solution

Ibn Battuta Gate offers holistic living solution

Apartments, a five-star hotel, customised offices and a shopping mall, provide ideal work-life balance in the heart of new Dubai – it even has its own Metro station

Dubai-based property management company Asteco, today announced that the apartments at Ibn Battuta Gate are now available for lease, offering residents a perfect balance between comfort and convenience thanks to its proximity to new state-of-the-art offices, leisure amenities and five-star service.

Adjoining the recently-opened Ibn Battuta Gate hotel, which is managed by Swiss hotel operator Mövenpick, featuring the iconic 60-metre gateway arch, and a stone’s throw from the mall, the complex provides superior living with annual rents starting from just AED 70,000 in an environment that fosters a healthy work-life balance.

The apartment building which consists of 156 stylish one- and two-bedroom apartments, spread over ten floors, is just 400 metres from the new Ibn Battuta Metro station, which provides direct links to Dubai World Trade Centre and Dubai International Financial Centre.

“The apartments offer luxury living at an affordable price. In addition, tenants also have the unique choice of using either the Mövenpick’s pool and health club or the state-of-the-art leisure facilities within the apartment building,” said Camilla Van Der Merwe, Head of Sales and Leasing at Asteco, which is managing the flagship mixed-use development on behalf of building owners Seven Tides.

Meanwhile, the office tower, located at the opposite end of the archway, spans 454,000 square feet across 11 floors and is perfectly positioned to attract businesses from both Dubai and Abu Dhabi. In addition, all Ibn Battuta tenants have access to dedicated secure covered car parking, located underneath the building.

“Living within walking distance of work is not often feasible, especially in a climate such as we have in the UAE, but Ibn Battuta Gate allows people to do just that. However, we are also seeing more and more people commuting between Dubai and Abu Dhabi, and this development is perfectly placed to service both markets, as well as the more local commercial hubs of Jebel Ali Free Zone and Dubai Media and Internet cities,” said Van Der Merwe.

Annual rents at the apartments include access to the five-star Mövenpick hotel’s swimming pool and gym, in addition to 24-hour security, internet connection, satellite television, utility bills and parking. Each apartment also features with built-in wardrobes, lavishly finished bathroom, and solid wood floors in the bedrooms and marble flooring in the main living area.

Another attraction, Ibn Battuta shopping mall spans 1.3 kilometres in length and features more than 250 retail outlets, a hypermarket and over a dozen food and beverage outlets, in addition to a 21-screen cinema.

Photo caption 1: Inside an Ibn Battuta Gate apartment.
Photo caption 2: The Ibn Battuta Gate complex.

About Asteco

Founded in Dubai in 1985, Asteco is a major regional real estate services firm and the one of the largest property services company in the United Arab Emirates. Asteco offers clients independent market analysis, design development consultancy and valuation services, sales and leasing services, as well as asset and property management services.

Asteco launches Buy Dubai

Asteco launches Buy Dubai

Interior fit-out company to source 80% of products from local suppliers, supporting UAE businesses and giving customers more control over quality and delivery times

Leading property management company Asteco has launched its exclusive furnishing subdivision, Buy Dubai, which is supporting the UAE economy by sourcing 80% of products from local manufacturers.

APM Design and Furnishing Department specialises in space planning, fit-out and project management for hotel and private apartments, transforming an empty shell into a vibrant and cosy living area with bespoke furniture and accessories, in just four weeks rather than the three to four month wait for furnishings bought overseas.

“Asteco was founded in Dubai and as such we believe in supporting the community that has enabled us to build a successful business. It can often be tempting to buy abroad but when shipping and import taxes are taken into consideration the savings are not always as great as they first appear. Supporting local suppliers, who can find it difficult competing in a crowded marketplace, also enables us to better manage the standard of all products to ensure customers receive a quality service synonymous with the Asteco brand,” said Kerrin Matthey, Head of Design Furnishing at Asteco.

Clients can choose from a number of themes, including contemporary and Balinese, as well as colours and price points for their apartment. Asteco Property Management will then source products, whether they are sofas, handmade rugs, mirrors or soft furnishings and fit them in the property ready for owners, or tenants, to move in.

The packages, which offer average delivery times of four weeks rather than 3-4 months if furniture is bought from overseas firms, can also add lasting value to properties. They are offered in various markets across the Middle East, including Abu Dhabi and Qatar, in addition to Dubai.

“Many items can be locally sourced, including furniture, table wear, mirrors and artwork and clients are amazed when we tell them their furnishing is manufactured in Dubai and timeline for delivery is about one month. But more than this, it allows us to easily check on the process, or send things back in the rare cases they do not meet our standards,” said Matthey.

“In these challenging times many designers look beyond Dubai for a cheap quick fix but finding the cheapest solution can be a false economy as in most cases quality and longevity are compromised. By using locally skilled tradesman and home grown supplies, we benefit when it comes to delivery schedules and quality control,” Matthey added.

The company has already successfully fitted out a number of commercial and high-end properties, including signature villas for the Manchester United team on Palm Jumeirah, whose furniture was produced by Dubai-based joiners. They have also secured contracts for the Sama Tower show apartments and Y Tower in Abu Dhabi.

Photo caption 1: A Buy Dubai furnished apartment in the Oceana complex on Palm Jumeirah.
Photo caption 2: An apartment in Sama Tower fitted out by Buy Dubai

About Asteco
Asteco, a major regional and international real estate services firm and the largest property services company in the United Arab Emirates, was founded in Dubai in 1985. Asteco offers independent market analysis, design development consultancy and valuation services, sales and leasing services, as well as asset and property management services.