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Dubai Rentals Steady During Last Two Months of 2009, New Study Shows

DUBAI — Dubai rentals remain steady during the last two months of 2009, a sign the market is reaching equilibrium, according to a new report published on Thursday.

Rentals in Dubai recorded a two per cent gain in November and one per cent in December on month-on-month basis, HC Securities & Investment said in its monthly research report. The take-up ratio continued to trend downwards, declining to 3.7 months in November before slightly rising to 4.3 months in December 2009, it added.

“Given initial signs of global recovery and improving risk appetite, we believe cyclical sectors are likely to outperform this year. However, we remain cautious about the domestic demand story in the UAE as the restructuring process unwinds,” the report said.

Available for sale stock fell by 71 per cent YoY from 18,000 units in December 2008 to 5,000 units in December 2009. On the other hand, transaction volumes remained robust in 2009, averaging 1,821 units/month compared to 1,300 units/month last year. Tightened liquidity ahead of the Nakheel sukuk maturity as well as a slowdown during Ramadan adversely impacted prices. Data show that mortgage values dropped to 21 per cent of total transactions in November 2009, from a strong recovery to 32 per cent in September 2009.

Volumes fell to 13 per cent in November from 25 cent in September. There is a one-month lag between price setting and registration, the slowdown during Ramadan was likely reflected in October 2009.

The price declines in October and November 2009 likely have to do with a drop in mortgage lending and hence affordability.

Areas where deliveries were made (mainly Downtown Burj Khalifa and Dubai Marina) lead the declines as buyers seem to be offloading their properties ahead of the final bullet payment. Nonetheless, a slight rebound was recorded in December 2009 with agreed prices rising 3 per cent MoM.The Abu Dhabi property market outperformed that of Dubai in 2009, despite roughly 90 per cent of transactions being off-plan.

· abdulbasit@khaleejtimes.com