The pace of construction activity has certainly picked up in Dubai over the past six months, with an increasing number of cranes gracing the skyline and workers’ buses filling the roads.
A notable feature of the market is that much of the activity is taking place within already announced master-planned communities, with relatively few launches elsewhere.
Among the projects experiencing ongoing activity are Citywalk and the Dubai theme parks at Jebel Ali (being undertaken by Meraas), Dubai Lagoons and Downtown (being undertaken by Emaar) and Business Bay (Dubai Properties).
Elsewhere, one of the most significant new announcements has been the Town Square project by Nshama, where the first residential villas and apartments have been released in what will be a major addition to the cities inventory over the next few years (with a total of 18,000 apartments and 3,500 townhouses).
One of the lessons learnt from the previous crash in the Dubai market is the importance of phasing projects over a considerable timeframe and this is certainly the case with most of the master planned projects currently underway. This does not however detract from the significant injection of supply that will complete across all sectors of the market over the next couple of years.
In the office market, as much as 900,000 sq m of space could complete in 35 projects over the rest of 2015. Although in reality much of this space is likely to be delayed, there will certainly be a significant amount of additional space entering the market. Many of these projects are located in master-planned projects, with the most prominent being Business Bay (which could see the addition of more than 300,000 sq m of office space this year). Perhaps the most significant addition to supply within the Business Bay is d3 (Dubai Design District), which has attracted a high level of preleasing ahead of its completion later in the year. This TECOM project will be the first in Dubai to offer dual licensing (onshore and offshore) within the same building.
By definition, the residential market is more scattered than other sectors of the real estate market, with the 22,000 units due to complete in 103 projects in 2015 being scattered across many different locations. Once again there are significant levels of completions scheduled within the existing master planned locations including Sports City, Dubai Silicon Oasis, the Liwa section of Dubailand, JLT, Business Bay and Downtown (where the Address residences with over 550 units is the largest single completion scheduled for 2015). As with previous years, most of the proposed new supply for 2015 is in the form of apartments (17,000) compared to villas and townhouses (5,000).
There have been no major retail malls completed in Dubai since Mirdif City Centre in 2010. This trend is expected to continue this year with the majority of the 200,000 sq m of new retail supply being in the form of smaller community centres or extensions to existing malls, the largest of which is Phase 2 of Dragon Mart in International City (which will add more than 100,000 sq m of further retail space). Among the major new malls to open over the next 2 years are City Centre Meaisem by Majid Al Futeim (in IPMZ), the Agora Mall in Jumeirah and The Avenue by Meeras (Al Wasl Rd).
Hospitality has been one of the strongest performing sectors of the Dubai real estate market over recent years and this has resulted in a number of new projects being undertaken. As with the office sector, a significant amount of this new supply has been within master planned areas such as Business Bay (JW Marriot Marquis, Oberoi and Sofitel) and Palm Jumeirah (Waldorf Astoria, Sofitel, Anantara and Rixos). There remains around 3,600 additional hotel rooms due to complete across Dubai in 2015, with this supply being split between 5 star (upscale) projects such as the Langham (Palm Jumeirah), Rosewood (DIFC) and Hyatt Regency (Healthcare city) and 3 star (midscale) projects including those by Hilton Garden Inn, Ibis and Auris Lodge.
Craig Plumb is head of research for JLL MENA