Deloitte’s predictions on Dubai’s office market performance for 2016:
- Office rental growth will be slow in some submarkets as a result of supply growth and the power of negotiation will, in general, shift from landlords to tenants in 2016
- There will be a trend towards more mixed use office led developments and a greater allocation of space to amenities, which will enable schemes to differentiate against competition as well as a strategy for developers to diversify risk and generate more robust cash flows
- Given the shortage of high quality office space in Dubai, some companies will be more amenable to leasing additional space than is required at present in order to accommodate future expansion, with a view to subletting surplus space in the short term
Deloitte’s predictions on Dubai’s retail market performance for 2016:
- There will be a further moderation in retail sales growth in 2016 against a strong dollar and slowing demand from international source markets such as Russia, China and parts of Europe
- Retail rental growth will be relatively flat in 2016, with the exception of super prime malls, and some secondary malls will need to incentivize the major retail groups to retain brands
- The Food and Beverage (“F&B”) retail will go from strength to strength in 2016 driven by greater brand penetration and expansion, and it is envisaged that there will be good prospects for fashion retail following the successful completion of the initial phase of D3 Design District
“Despite the decline in average residential sales prices in Dubai during 2015, price growth over the last four years reflects a compound annual growth rate of 11.6%, which outperforms other leading global cities such as London, Paris and Singapore,” concludes Williamson.
