Residential sector in Dubai and AD facing marginal decline in 2020, says JLL’s Dana Salbak
Quarterly declines in residential sector prices are expected to slow in 2020
Almost all sectors of the real estate market in both Dubai and Abu Dhabi will remain in the downturn stage of the cycle, said JLL during its annual outlook event hosted in Dubai which also shared insights on how best to optimise and enhance the performance of real estate assets during periods of uncertainty.
“We are seeing rents under pressure in the residential sector with 35,000 residential units that were delivered in Dubai in 2019. It is the largest number of deliveries in one year, and to put things in perspective, in Abu Dhabi only 1,000 to 1,200 units were delivered during the same year,” said Dana Salbak, head of research at JLL.
Hence, she added, this puts pressure on sale prices and rental rates, while it also lets people gauge the momentum of deliveries. On an annual level, Salbak noted that sale prices declined about 5% while rental rates declined about eight to 10 per cent.
“However, what we are seeing is that on a quarterly basis this rate of decline is beginning to slow down for rental rates and sales price not just in Dubai but in Abu Dhabi as well, have registered between one to two per cent on a quarter on quarter basis (Q4 2019 vs Q3 2019). This leaves us to believe that the residential market is reaching the bottom of the cycle,” Salbak pointed out.
Commenting on how the Expo 2020 Dubai will affect the market, Salbak said that at best it will stabilise the residential market. And the reason for this, she explained is that an additional 63,000 residential units are expected to come into the market in Dubai in 2020.
“Consequently, the residential sector will likely remain exactly where it is over the next 12 months, with some marginal decline across Dubai and Abu Dhabi, but overall, not much is going to change. Even if we assume a 50% materialisation rate for the 63,000 residential units, its still a large number – a 15 per cent average increase,” she noted.
“As conditions remained soft across most sectors of the UAE real estate market in 2019, we are keen for entities to now focus on rising above it and making the most of the opportunities that are ahead this year. Our aim is to look beyond the uncertainty and start adapting more long-term and sustainable strategies in order to successfully pursue a period of stabilisation, and ensure the best utilisation of real estate assets,” concluded Salbak.
