- Continued growth in property values (+5% since last quarter) is contrasted by a downward adjustment in some areas (between 1 - 5%)
- Prime commercial market continues to see a rise in rent price by 2 - 5%
- Repositioning of older retail assets maintain their competitiveness
Abu Dhabi - The latest quarterly real estate report issued by MPM Properties, the real estate consultancy arm of Abu Dhabi Islamic Bank (ADIB),showsa divergence in performance across the Dubai real estate market over the last 3 monthswith continued value appreciation in some areas (+5%increase quarter on quarter) contrasted by other areasseeing values fall (between 1 to5%). The report also highlights that sales volumes have slowed from the peak of market activity witnessed at the beginning of the year.
The report covers Dubai's residential, office, retail and hospitality sectors with analysis based on prime data from MPM's managed portfolio and ADIB's home financing business.
Paul Maisfield, Chief Executive Officer of MPM Properties, said: "The slowdown must be put into context as we have seen year on year price growth of over 30% in many parts of the city. A combination of seasonal factors, the ebbing of the Expo 2020 effect and the growing impact of the mortgage cap ruleshas all contributed to the dynamics of the market in the last quarter."
Across some areas of the residential market, sales volumes have declined from the peak witnessed at the beginning of the year which was driven by the EXPO 2020 win. Additionally, the renewed surge of off-plan projects has impacted demand for completed stock as some buyers have elected for off-plan options.
Rental values have followed a similar trend, with variance being seen across some of the major developments in the City:
- JBR has seen rents eroded in the last 3 monthsby up to 5% with some residents choosing to relocate due to traffic congestion
- Downtown rents have declined slightly (3%)followinga sustained period of rising rents that resulted from the Expo 2020 announcement
- DIFC has shown a slight upwards movement (+2 %) over the last quarter reflecting a lack of availability
- High rents in prime areas have led to tenant's demand being diverted to locations such as Jumeirah Village and Al Furjan, with rents increasing by 5% and 2% respectively over the last quarter
- Springs and Meadows, along with premium villas on Palm Jumeirah, have seen a slight correction in rental prices, ranging from between 3 to 4%
In the office sector, the report highlights thebenefit from economic growth and improved sentiment over the last quarter, with prime Grade A offices seeing rents rise on average by 2 to 5%.There has been a drop in the vacancy rate in the DIFC, however, which has resulted in rents increasing by 5%. Additional supply in Burj Daman and Central Park within the DIFC is expected to balance conditions over the next 6-12 months.
Al Barsha, Jumeirah Lake Towers (JLT) and Business Bay have also experienced high levels of activity in the last quarter, with tenants remaining selective over the quality of buildings and management companies that they choose.
Commenting on the report Mr Maisfield said: "Despite there being a large quantity of speculatively developed vacant offices in the market the majority of available space does not meet tenants requirements. Given the prevailing market dynamics, we are advising our clients to shift their development strategies to focus on satisfying demand from specific tenants on a 'build-to- suit' basis, developing an office environment suited specifically to the individual business's needs."
Dubai's retail sector is being driven by continued population and tourism growth, resulting in sustained high levels of retail consumer demand. The city has achieved one of the best performing occupancy cost ratios globally of 10 to 12% as retailers benefit from being situated within some of the strongest performing malls in the world, with long waiting lists of tenants seeking space.
The report also highlights that many older retail assets are repositioning themselves in order to remain competitive as the newer malls capture increasing levels of market share, most noticeably BurjumanCentre and Festival City.
The tourism sector continues to grow at a healthy pace, driven by record tourist arrivals so far in 2014 which has offset the impact of increased room supply. The report points out that the hospitality sector is also preparing for growth in medical tourism and some of the new hotels have rooms that are adapted for those with disabilities, including wheelchair-friendly public areas.
A copy of the full report can be obtained fromwww.mpmproperties.ae
-Ends-
For media information, please visitwww.adib.aeor contact:
ADIB
Lamia Hariz
Head of Corporate Communications & PR
Mobile: +971 50 616 4191
Email: Lamia.Hariz@adib.com
Brunswick Group
Mohammad Al Qassem
Account Director
Mobile: +971 56 174 8649
Email: ADIB@brunswickgroup.com
© Press Release 2014
