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In its annual review of the UAE Real Estate Market for 2015, real estate investment consultancy and advisory firm JLL has assessed the latest trends in the office, residential, retail and hotel sectors.
According to the report, real estate performance last year remained largely stable as developers adjusted to lower oil prices, reduced government spending and a significantly slower rate of economic growth than in recent years by reducing levels of new supply.
Across the two cities of Dubai and Abu Dhabi, just 8,000 residential units were completed last year, less than half the number completed in 2014, as developers responded to more subdued market conditions and tightened liquidity, a trend likely to continue this year. The residential sales market has been affected by a decline in investor sentiment driven by lower oil prices and a slowdown in government spending, as well as regional geopolitical unrest, while US dollar strength is making UAE real-estate more expensive for overseas investors.
Craig Plumb, Head of Research at JLL MENA, said: ''Following a rapid increase of residential rents and prices between 2012 and 2014, the market has now clearly stabilised, with sales prices falling in Dubai and remaining stable in Abu Dhabi during 2015 — but with a significant decline in transaction volumes in both markets. Prices softened by around 11 per cent in 2015 according to RERA in the Dubai residential market and are expected to decline further over the next 6 months.''
Average commercial rents have remained unchanged in both Dubai and Abu Dhabi. While there has been rental growth recorded in a number of the best quality schemes in both markets this is not an accurate reflection of the overall market where rents have generally remained unchanged in the face of significant levels of vacant space.
Decline in new buyer enquiries
According to the latest release of data collected from a survey of the Dubai real estate sector, sponsored by Emirates NBD and produced by Markit, real estate agents have indicated a subdued end to 2015 for the Dubai property market, with the majority of survey respondents noting declines in new buyer enquiries and transaction numbers over the three months to December. The latest drop in new buyer enquiries was the sharpest since the survey began in April.
Looking ahead, around 47 per cent of real estate agents expect a fall in Dubai property values over the course of 2016, while 32 per cent forecast a rise. Survey respondents generally noted that market conditions would favour buyers over the next 12 months, as construction volumes look set to remain strong while the uncertain economic outlook has acted as a brake on investor demand.
Did you know that liquidity crunch bites deep into Dubai realty prospects
Source: Property Weekly