New Year brings with it splendid new opportunitiesJanuary 4, 2016 10:46
The future is bright for Dubai’s real estate
All sectors of the industry are recovering, but some faster than others, reveals report
January 20, 2014 5:42 by Maha El Gazzar
Investment management company Jones Lang LaSalle released the latest Dubai Real Estate Market Overview for Q4 of 2013, which provides a review of the office, residential, retail, hospitality and industrial sectors.
The Dubai economy ended 2013 on a positive note, with real GDP growth estimated at 4.7 per cent according to the Dubai’s Department of Economic Development (DED). The same year saw the recovery of all sectors in the Dubai Real Estate market, however, not all of them performed the same way. While the residential, retail, hotel and industrial sectors witnessed strong and relatively broad-based growth, the recovery of the office sector remains more selective and concentrated in a few prime locations, with high vacancies and significant new supply depressing rental pressure elsewhere.
The real estate investment market in Dubai saw a limited number of transactions in Q4 of 2013, as most sellers adopted a wait-and-see approach ahead of the results of the Expo 2020 bid. The main buyers in the Dubai market continue to be the Gulf Arabs, with an increased interest in land.
The office leasing market witnessed more activity in Q4, boosted by seasonal factors as many corporates acted ahead of year’s end. Prime rents continue to improve as the increase in demand for the best quality spaces continues. Elsewhere, average office rents have remained unchanged with increases in some projects being offset by declines in others.
The total office space delivered in 2013 stood at 390,000 square metres, 34 per cent than the completions in 2012. The CBD (DIFC, Burj Downtown and SZR) spans approximately 19 per cent of the existing office stock. The fastest growing area is Business Bay, which accounts for approximately 50 per cent of the future supply expected over three years.
The residential market ended 2013 on a strong note, with prices increasing by 22 per cent year-on-year and rents improving 17 per cent year-on-year. The recovery has been broad based and evident in prime locations as well as secondary and more affordable spaces. While further growth in rents and prices are anticipated, 2014 is expected to see a slowdown in the unsustainable levels of growth seen in 2013.
The retail market registered growth in 2013, with turnover and rents increasing in both primary malls and community based centres. Street shops have also been increasingly popular in select locations within Dubai in 2013.
The hotel sector had a very positive year with record tourist arrivals. Despite a number of notable openings, the market registered remarkable occupancy rates (year-to-date of 80 per cent) and high Average Daily Rates (year-to-date reaching US$241). Securing the Expo 2020 bid is expected to give an additional boost to the sector and lead to further hotel developments in 2014 and beyond.
The industrial market registered solid growth in 2013 with a number of infrastructure projects benefiting the sector. Demand continues to shift to newer areas to the south of Dubai and this is expected to remain the case given the proximity of these areas to the Expo 2020 site.