Dubai property prices drop, rents flat in Q1, says JLL
Residential rents remain ‘relatively flat’ while sale prices see ‘marginal decline’, consultancy says
Dubai saw subdued real-estate activity in the first quarter of 2015, with new housing coming online amid cooling sentiment in the market, a report has found.
Jones Lang Lasalle said residential rents remained “relatively flat” while sale prices saw a “marginal decline across both apartments and villas” in the first three months of the year.
Craig Plumb, head of research at JLL’s Dubai office, wrote in the report that the Dubai residential market was moving to a “period of correction”. The JLL team predicted that the next driving force in the market would be end-users or middle-income earners, as opposed to speculative buyers.
“The first quarter of the year saw developer and government initiatives target the affordable housing sector. On the development side, Nshama launched 2 phases of its Town Square project, Zahra & Hayat, consisting of townhouses and apartments below AED 600 per square feet, located close to the Arabian Ranches.
“The Dubai Municipality has proposed to introduce mandatory affordable housing quotas for all new residential developments. In addition, it allocated over 100 hectares of land for affordable housing across various locations in Dubai, targeting buyers and tenants with monthly salaries of AED 3,000 – AED 10,000,” the report explained.
Meanwhile, Dubai’s hospitality market saw demand increasing at a slow rate in the first quarter of 2015. Last year, the sector welcomed 11.6 million guests, according to figures released by Dubai Tourism and Commerce Marketing.
“The hospitality market saw RevPAR’s drop on an annual basis,” the report said. “While occupancy rates remain strong at 86%, the increase in supply continues to outstrip demand, placing downward pressure on average daily room rates,” it added.
Despite this representing a 6% year-on-year increase, the rate of growth actually declined from the 11% posted in 2013, the report said.
“The slowdown can be attributed to a decline in the number of tourists from Russia and the Eurozone. By contrast, tourist numbers from emerging markets have increased significantly. Guests from South Asia, Far East Asia and Africa increased 14%, 13% and 11% respectively,” the research team wrote.
“This comes on the back of rising wealth and changing consumer habits in emerging markets, in addition to increased efforts to diversify Dubai’s inbound market.”
The report also found that the delivery of more Grade A office space has “limited rental growth in the office sector.”
