CBRE: Affordable rental locations outperformed prime areas
Dubai’s residential sector saw a further sales decline in the fourth quarter, with a 4% drop in rates as well as lower volumes, according to real estate advisory CBRE.
Average apartment and villa sales rates fell 16% and 14% year-on-year, while overall unit transactions decreased 33%, CBRE said.
“With the actual delivery of units falling short of anticipated supply levels, the occupier market has held up comparatively well, particularly for more affordable locations such as Jumeirah Village Circle, Dubai Sports City and Dubailand Residences which all achieved rental growth,” said Mat Green, Head of Research & Consultancy UAE at CBRE Middle East.
“As has been the trend, prime areas such as the Palm Jumeirah, Dubai Marina and Downtown Dubai continued to see rental deflation with rates falling between 1-3% during the quarter.”
With supply levels picking up in coming months, Dubai’s residential sector is expected to see further sales price deflation, leading to further falls in rental and sales values. Approximately 48,000 units are expected to be delivered between 2016 and 2018.
The office market has remained steady in 2015, despite tough economic conditions in the wider region amidst low oil prices, Green noted.
“Prime rents have been stable with no change recorded year-on-year. However, there has been a pick-up in pre-leasing activity during 2015, reflecting the presence of latent demand for good quality single owned office accommodation in locations such as Dubai Media City, D3, Trade Centre and JLT.”
The total office stock during 2015 stood at 8.5 million sqm, and a future supply of 1.1 million sqm is expected to be delivered between 2016 and 2018.
According to the CBRE report, Dubai’s hospitality sector has remained resilient in the face of challenging economic conditions, locally and globally. The Emirate welcomed 10.5 million guests the first nine months of 2015, as compared to 9.6 million during the same period last year, registering around 9% growth.
Despite the increase in visitor numbers, year-to-date occupancy rates for the first 10 months of 2015 were down around 1% at 77%, Green said. ADR (average daily rate) and RevPAR (revenue per available room) performance suffered more, falling 7.6% and 9.5% respectively. “This was largely attributed to increased competition amidst rising room supply, with over 6,000 new hotel and hotel apartment keys delivered during 2015.”
Dubai’s retail sector also saw an expansion in supply during the year, with the opening of new facilities such as City Centre Me’aisem, Box Park, Dragon Mart 2 and the Golden Mile, as well as the expansion of the Mall of the Emirates.