Dubai, Abu Dhabi get more affordable for renters, buyers

UAE Market Report Q3 2016

The highlight of UAE real estate’s third quarter of the year 2016 was certainly the successful Cityscape Global exhibition in Dubai. The highly anticipated event not only saw leading developers announce key real estate projects, it also helped rejuvenate the market and showcase the faith major players place in the realty sector of the UAE in general and Dubai in particular. From our observations, Dubai South appears well set to become the next investment hotspot in Dubai, as ambitious project launches by developers such as Emaar hint at exciting times for the locality.


Although there has been consistent improvement in values in localities that are highly popular with renters and investors, there was an overall downward movement of apartment rents in Dubai compared to average values in Q2 2016.

The average apartment rent in Dubai dropped to AED 125,000 per annum in Q3 2016, down 2% from the Q2 2016 average of AED 128,000. The average yield for the quarter across all bed categories was calculated at 5.5%.

Category-wise, studio unit rent was down 2% in Q3. The units were being rented out for an average of AED 55,000 in Q3 compared to their Q2 average of AED 56,000. One-bed apartments witnessed a greater drop of 8%, with the average rent recorded at AED 92,000 compared to AED 100,000 in Q2. The average rent of two-bed units recorded a slight 1% drop in average rent, so did three-bed units.

The average rent for two-bed units was AED 144,000 in Q3, while that for three-bed apartments was recorded at AED 200,000. Average rent for 4+ bed apartments held its ground, falling a negligible 1% in Q3 to AED 302,000.

Average yield for studio units in Q3 was 6%, while that for 1-bed units remained at 6.6%. Two-bed units offered owners a rental return of 6% and the yield for three-bed units was recorded at 5.5%. The largest apartments, the 4+ bed category returned an average yield of 4%.

Top Localities for renting apartments in Dubai (Q3 2016)

  1. Dubai Marina
  2. Jumeirah Lakes Towers (JLT)
  3. Bur Dubai
  4. Downtown Dubai
  5. Dubai Silicon Oasis

Top Localities for buying apartments in Dubai (Q3 2016)

  1. Dubai Marina
  2. Jumeirah Lakes Towers (JLT)
  3. Downtown Dubai
  4. Business Bay
  5. Dubai Sports City

Abu Dhabi

Despite regional instabilities, the property market of Abu Dhabi managed to ward off all turbulence and stood strong enough to be a buy-to-let heaven with rental yields averaging at 7% and going as high as 8% in certain bed categories.

Due to the limited residential supply, apartment rents remained stable throughout the first half of the year, but compared with Q2 2016, Abu Dhabi experienced a 4% downward adjustment in the average apartment rent in Q3 2016. Where tenants enjoyed the welcome affordability, Q3 also brought some good news for property investors. Compared with Q2, apartment prices in Abu Dhabi increased 2.2% in Q3 2016 on average.

Per stats, the average studio rent in Abu Dhabi adjusted 6% downwards to AED 56,000 in Q3 2016, while rental values of 1-bed apartment also followed suit and came down 6% to AED 90,000. Two-bed and 3-bed apartment rents fell to AED 133,000 and AED 170,000 respectively, registering decreases of 1% and 6%. Rents of 4+ bed apartments went up marginally (1%) in Q3 compared with the Q2 average, fetching AED 242,000.

Average rental yields in Abu Dhabi remained lucrative as ever at 7%. Studio apartments offered an impressive average yield of 8% in Q3, while 1-bed and 2-bed apartments returned yields of 7% each. The average rental yield of 3-bed apartments hovered around the 6% mark, while the 4+ bed category returned an encouraging yield of 5% in the third quarter of the year.

Top Localities for renting apartments in Abu Dhabi (Q3 2016)

  1. Al Reem Island
  2. Al Raha Beach
  3. Al Reef
  4. Saadiyat Island
  5. Al Ghadeer

Top Localities for buying apartments in Abu Dhabi (Q3 2016)

  1. Al Reem Island
  2. Al Raha Beach
  3. Khalifa City A
  4. Al Muroor
  5. Corniche Area

Our Take

There was a clear slowdown in the drop in rental values in Dubai, which could be attributed to the market slowly recovering from the bigger drops in previous months. The correction in rents could also be a result of a consistently growing set of tenants now looking to become homeowners by opting for numerous rent-to-own offerings by several developers, a phenomenon that has had an obvious effect on the rental segment of the market. The fall in the average apartment price in Dubai in Q3 compared to Q2 was significantly lower at 3.8%.

Abu Dhabi on the other hand presents a mixed picture. Although the falling rents have made accommodation in the emirate more affordable, the strength of rental yields mean the units offer an equally lucrative proposition to investors. The capital’s strong economy is keeping the realty sector buoyed, while growing opportunities for work make for a healthy rise in population, which in turn keeps the market going.

Considering the host of project launches and persistent interest of local and real estate developers, it is safe to say the UAE realty sector is headed in the right direction and better times are around the corner.