Residential and hotel sectors lead growth in Dubai
Total real estate transactions reached AED236 billion in 2013, according to a report by Jones Lang LaSalle
April 8, 2014 11:19 by kippreport
The real estate market began 2014 on a high note and, following from its strong performance last year, promises continued economic growth, according to Jones Lang LaSalle’s (JLL) latest report, titled Dubai Real Estate Market Overview Q1 2014.
“The Dubai Land Department has revealed that the total value of real estate transactions in Dubai rose from AED154 billion in 2012 to AED236bn in 2013”, reveals the report.
The residential sector saw increased prices and rents in all areas, with prices in some areas reaching peak levels – the overall increase was 33 per cent year on year. According to consulting firm ECA International, Dubai is among the 20 most expensive locations in the world for high-end rental apartments; it now ranks 16th, which is a big leap from being 35th in 2012. The shortage of middle income housing in Dubai provides further opportunity for the real estate industry to grow, if it can meet the challenge of supply and demand.
Despite the fact that residential growth has overtaken the hotel sector this year, the latter has maintained its strong performance with increasing tourist arrivals and occupancy rates reaching 88 per cent, with average daily rates rising to $298.
The report also reveals that the retail sector is booming, with many new street shops being launched. The Dubai Mall maintained its position as a prime retail destination, receiving 75 million guests in 2013, while the average retail rent in primary malls is AED6900 per square metre.
“According to the Department of Economic Development, the GDP of Dubai will grow by 4.7 per cent in 2014. Tourism, trade, transportation and real estate are all witnessing strong performance and will continue to be the main drivers of the economy,” reveals the report.
With inflation running at the highest level since December 2009, prices in Dubai rose by 2.6 per cent and there is more positive economic growth on the horizon. In January 2014 two new government departments were established to reinforce and regulate Dubai’s appeal to global investors and tourists. Dubai Silicon Oasis also announced plans to develop a ‘Silicon Park’, valued at AED1.1bn, as the first integrated ‘smart city’ by 2017.
The area to the south of Dubai looks promising for the industrial market, attracting the most attention due to its improved infrastructure and proximity to the Expo 2020 site. Estimated infrastructure costs for the 2020 site total AED12.54bn, according to JLL.