The broad-based recovery witnessed in the residential sector over the past 18 months has now slowed down, as rental prices and sale values in Dubai have stabilized in most locations, said a report.

The Dubai real estate market has seen a welcome levelling-off during the summer months, stated leading real estate investment and advisory firm JLL in its report.

While new projects continue to be announced, these have no immediate impact on supply as they are phased over a longer timeframe, it stated.

On the hotel sector, JLL said it had underperformed over the month of July, registering 50 per cent occupancy rates. However, it is expected to trend upwards into the peak season in the last quarter of the year, said the expert.

"The year to August saw occupancy rates and average daily room rates remain largely unchanged year-on-year. On the supply side, the third quarter saw the opening of the Warwick Hotel on Sheikh Zayed Road and Doubletree by Hilton JBR, increasing the current hotel stock to 62,800 keys," remarked Craig Plumb, the head of research at JLL Mena.
 
While the remaining three months of the year are expected to witness some openings, the sector is likely to maintain its strong performance as Dubai continues to position itself as a leading tourist destination, said the JLL in its report.

Elsewhere in the market, the retail segment maintained its solid growth while the recovery of the office sector remains patchy, as high levels of supply continue to constrain the market, it added.

On the office sector, JLL said the third quarter continued to see a two-tier market. "While prime central business district (CBD) rents have remained stable over the quarter, they are expected to increase as demand remains strong for Grade A office space. Meanwhile, rents in secondary locations are expected to remain under downward pressure as more Grade A office space enters the market by 2015."
 
On the demand side, corporates are becoming increasingly aware of the importance of sustainability and there is heightened interest for Leed certified buildings. As traffic congestion increases, tenants and therefore owners are also paying more attention to access and parking issues.

On the residential sector, JLL said while property values in Dubai have increased over the past year, the third quarter saw more subdued growth levels in both apartment and villa sale prices and rents.

Average rents and sale prices grew by just two per cent and one per cent respectively in the third quarter (down from three per cent and six per cent in the second quarter).

Driven by tighter government regulations and an increasing mismatch between buyer and seller expectations, the residential sector is now experiencing a welcomed period of stability.

As the various new project announcements will have no immediate effect on supply, rents and prices are expected to remain relatively stable over the remainder of 2014, with the market behaving in a more sustainable and healthy manner,stated the expert.

On the retail sector, JLL said the Dubai retail market has witnessed the completion of two projects in the third quarter of 2014. The Discovery Gardens (8,700 sq m) and Jumeirah Park (10,600 sq m) Community Centers have increased the total retail stock to 2.9 million sq m.

While size still matters (Mall of the World), some developers are shifting their focus to community and neighborhood centers that capture the attention of residents, and generate additional recurring revenues as opposed to cyclical residential sales. Three such malls are scheduled for completion over the last quarter of the year, said the JLL report.-TradeArabia News Service