Opportunities remain in the market despite ‘headwinds’
Dubai’s residential and office market is set to slow this year, but despite some “headwinds” there will still be opportunities in certain sectors, according to accountancy giant Deloitte.
Residential sales prices declined 10% in 2015 and are expected to decrease further this year, while rentals are also expected to soften in certain sub-markets, Deloitte Corporate Finance Limited said in its second annual Real Estate Predictions Report for Dubai.
“Over the past 13 years Dubai has experienced development on a scale and to a standard like no other real estate market globally. Along with other regional and international markets it has suffered the effects of the global financial crisis,” said Robin Williamson, managing director, Deloitte Corporate Finance Limited, which is regulated by the Dubai Financial Services Authority.
“Today, it is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors.”
Some analysts have forecast that around 40,000 units will be delivered in Dubai this year – but consultations with key developers suggest a number closer to 10,000, Deloitte said.
In terms of the office market performance, rental growth is expected to be slow in some submarkets as a result of supply growth.
Deloitte also expects a trend towards more mixed-use office-led developments, and a greater allocation of space to amenities. It says that this will enable schemes to differentiate against competition as well as a strategy for developers to diversify risk and generate more robust cash flows.
Given the shortage in quality office space in the emirate, some companies may be more willing to lease additional space with the intention of subletting in the short term, Deloitte said.