All sectors of the Dubai market remain in the downturn phase of the cycle, with the likelihood of continued falls in average prices and rentals over the rest of 2010. However, the pace of decline has eased from that seen in 2009 as the market moves closer to the bottom of the current cycle, says the latest report ‘Dubai City Profile : Dubai – Sharpening the Competitive Edge’ from Jones Lang LaSalle.
Demand has increased in most sectors of the market compared to that experienced in 2009, the timing of any recovery has been extended due to excess supply. The office market has seen increased tenant demand and positive net absorption in 2010, while hotel demand has also increased over 2009 levels as the market has become more competitive.
The market has moved into a third phase of the downturn. Having passed through the initial demand side shock resulting from the global financial crisis in 2008 and the subsequent debt problems facing Dubai World in 2009, this year has been characterised by an increasing oversupply in some sectors of the market. This excess supply is dampening sentiment and delaying the timing of any general market recovery.
Despite further short term pressure on pricing, there remains interest among investors in securing high quality and securely leased real estate in Dubai. The significant re-pricing that has occurred over the past two years is stimulating renewed demand from both occupiers and investors who recognise that Dubai remains the most competitive business environment in the MENA region.
