Dubai residential market posts solid growth in 2013
Dubai, January 19, 2014
The residential market in Dubai ended 2013 on a strong note, with prices increasing 22 per cent year-on-year on average and rents registering a 17 per cent growth, said a report.
The recovery has been broad-based and evident in prime as well as secondary and more affordable locations. While further growth in rents and prices is anticipated, 2014 is expected to see a slowdown in the unsustainable levels of growth seen in 2013, according to property expert Jones Lang LaSalle (JLL).
The real estate investment market in Dubai saw a limited number of transactions in the fourth quarter in 2013, as most sellers adopted a wait-and-see approach ahead of the results of the Expo 2020 bid, said JLL in its "Q4-2013 Dubai Real Estate" report.
The main buyers in the Dubai market continue to be the Gulf Arabs with an increased interest in land, it added.
In summary, 2013 saw the recovery of all sectors of the Dubai real estate market (residential, retail, hotel, industrial and offices). However, not all sectors performed similarly, the expert said.
"While the residential, retail, hotel and industrial sectors witnessed strong and relatively broad-based growth, the recovery of the office sector remains more selective and concentrated in a few prime locations, with high vacancies and significant new supply depressing rental pressure elsewhere," it added.
According to JLL, the office leasing market witnessed more activity in the fourth quarter, boosted by seasonal factors as many corporates acted ahead of year end.
Prime rents continue to improve as the flight to quality continues to increase demand for the best quality space. Elsewhere, average office rents have remained unchanged with increases in some projects being offset by declines in others, it added.
On the retail market, JLL said there was solid growth in 2013, with turnover and rents increasing in both primary malls and community-based centres. Street shops have been also increasingly popular in select locations within Dubai in 2013, said the review.
According to JLL, the hotel sector too had a very positive year with record tourist arrivals. Despite a number of notable openings, the market registered remarkable occupancy rates (year-to-date of 80 per cent) and high average daily rates (year-to-date reaching $241).
Securing the Expo 2020 bid is expected to give an additional boost to the sector and lead to further hotel developments in 2014 and beyond, stated the expert.
The industrial market too registered solid growth last year with a number of infrastructure projects benefiting the sector. Demand continues to shift to newer areas to the south of Dubai, and this is expected to remain the case given the proximity of these areas to the Expo 2020 site, it added.
Craig Plumb, the head of research (Mena), said: "2013 saw a definite improvement in sentiment and confidence towards the Dubai real estate market, culminating in the Expo 2020 decision, that provided a particular boost in the final months of the year."
"Sentiment and confidence are important drivers of the Dubai real estate market, but the underlying economic and demographic fundamentals have also improved in 2013," he noted.
Plumb pointed out that the relatively broad-based recovery is likely to continue this year, with increases in average prices and rentals forecast in most sectors.
"The pace of growth seen in late 2013 may however prove to be unsustainable, given the significant over supply and high completion levels expected in some sectors," he explained.
"The Dubai government has taken several measures to moderate the rapid increase in prices seen in 2013 and create more stable market conditions. These measures should help reduce some of the speculative pressures and reduce the likelihood of a significant price correction in 2014," he added.-TradeArabia News Service