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The downward trend in residential performance continued in the third quarter with sale prices falling further and rents registering marginal declines, according to JLL’s third quarter Dubai Real Estate Market Overview report. JLL noted that while the general Reidin sales index dropped 10 per cent year-on-year in August, the rental index points to a decline in rental values for the first time, albeit marginally at 1 per cent.
“This comes as tighter government regulations, higher inflation levels and a stronger dollar have made property expensive for both local and overseas investors, resulting in a decline in the volume of transactions and a drop in prices to more sustainable levels,” JLL said. “Prices are expected to continue softening over the remainder of the year and into 2016, before the emirate witnesses another growth cycle in the years leading up to [the World] Expo 2020.”
The quarter also saw new projects targeting middle-in- come housing, including Nakheel’s Jebel Ali Estate and further stages within Nshama’s Town Square development. “In addition, the lack of major new mega projects and the increased emphasis on housing for the middleincome segment of the population signifies the maturing of Dubai’s residential market,” said Craig Plumb, Head of Research at JLL Middle East and North Africa.
A slight slowdown
The hotel market also continued to witness a slowdown in performance over the third quarter, which JLL said is partly attributed to the seasonal nature of tourism in Dubai. While occupancy rates registered 77 per cent year to July, average daily rates (ADRs) dropped 7 per cent year-on-year to reach $227 (Dh833.8) over the same period. Revenue per available room (RevPar) declined 9 per cent year-on-year to reach $175 in the year to July.
The third quarter also saw about 450 keys added to the supply stock, with the delivery of Intercontinental in Dubai Marina, Ibis Styles in Jumeirah and Hyatt Place in Baniyas Square, Deira.
Drop in rents
Activity in the retail market remained subdued over the third quarter as annual rental growth rates across all mall types continued to slow down. “With the market situated at the top of the real estate cycle, we expect rents to drop over the next quarter and into 2016,” JLL said.
In the office sector, the third quarter saw the delivery of around 283,000 sq m of office gross leasable area (GLA), of which 53 per cent are strata-owned buildings located in Business Bay. An additional 948,000 sq m of GLA is scheduled to be delivered by 2017. “However, we remain cautious on the delivery of these projects within this time frame,” JLL said. “Some towers have been delayed, while others like Symphony Tower and Platinum Tower in Business Bay [initially scheduled for delivery in 2016] have been converted to hotel apartments.”
Source: Property Weekly.