The latest ‘Dubai Real Estate Market Overview – Q2 2010: June 2010’ from Jones Lang LaSalle, the world’s leading real estate investment and advisory firm, covers the Dubai office, residential, retail and hospitality market segments. It reports that tenants have greater opportunities due to increasing availability of space, declining rents, and improved lease terms as the property market begins to bottom out.
Highlights of the overview include:
- The Dubai office market continues to fragment with a further decoupling between the overall market (which is experiencing increasing vacancies) and good quality buildings in the CBD (where there remain selective shortages). While average city-wide vacancies have increased further (to around 38%), only 12% of the 7.5 million sq ft of completed space in single ownership within the CBD is currently vacant.
- Retail vacancies have increased to between 8% and 10% as competition intensifies and retailers have closed poorer performing stores. This is resulting in a flight to quality and increasing problems (broken tooth phenomenon) in poorer quality centres. The more enlightened centre managers are responding to changing circumstances by seeking to proactively engage and offer more attractive and flexible terms to their tenants.
- Supply in the residential sector continues to complete, with fewer delays being experienced than in the office market. While sales activity has increased and average prices have remained relatively stable, rentals have continued to decline significantly across Q2, particularly in respect of luxury / high end villa and apartment projects.
- The hotel market is the closest to the bottom of the cycle. Increased demand has resulted in a growth of occupancies during 2010, but average room rates and RevPAR continue to decline, especially in respect of city hotels.
