The Dubai real estate market maintained its positive performance in Q2 2014, according to Dubai Real Estate Overview issued by JLL, the world’s leading real estate investment and advisory firm.
The second quarter (Q2 2014) report provides the consultancy’s perspective on the latest trends in the office, residential, retail and hotel sectors in the Dubai market.
Commenting on the report, Craig Plumb, Head of Research at JLL MENA, said: “The Dubai real estate market maintained its positive performance in Q2 2014. Although the residential sector saw prices and rents increase across most areas, there are signs that the rate of growth is slowing down as Q2 experienced a marked slowdown in the volume of residential sales, particularly in respect of existing villas. While the retail and hotel sectors continue to experience growth, recovery in the office sector remains patchy with the large level of supply and high vacancy rates placing pressure on overall rental values. The major news about the proposed Mall of the World in the Umm Sequeim area reflects confidence for both the retail and hotel sectors.” Residential: Although the residential sector saw prices and rents increase across most areas, the rate of growth has started to slow from that seen earlier in the year. Average sale prices grew by 6% in Q2, down from 10% in the previous quarter. With signs of reduced sales activity (particularly in the secondary villa market), it is likely that asking prices in this sector will decline further in coming months. Sales volumes have declined in all sectors recently, with data from the Dubai Land Department showing villa sales in May 2014 down by almost 50% on the same month in 2013.
Office: While continued economic growth has improved sentiment and generated demand for commercial space, the high level of both current vacancy and future supply continue to constrain the market. The Dubai office market operates as a number of quite different submarkets, based upon location, tenure (strata or single ownership), licence structure (free zone / onshore) and quality. While overall market vacancies remain high (25%), there are pockets of shortage that have resulted in major occupiers seeking to have new space built for their requirements rather than occupy sub optimal space in existing buildings.
Retail: With limited additions to stock and continued interest from retailers, rents in the best performing super regional malls have increased by as much as 12% over Q2. Increases have been more modest in smaller centres and secondary malls but the retail sector has benefitted from higher spending from both tourists and local residents. Confidence in the retail market is reflected in the announcement of the Mall of the World (a planned new mall around twice the size of the Dubai Mall, on Sheik Zayed Road immediately opposite the existing Mall of the Emirates.
Hotel: Despite the completion of around 1,500 additional rooms in Q2, the Dubai market continues to grow, recording the highest Rev-PAR levels since 2008. Average occupancies remained relatively stable at around 85% during the year to May 2014, with room rates increasing by 3% to USD276 making Dubai one of the strongest performing hotel markets globally.
Source : WAM News Agency for United Arab Emirates
