Market Conditions Soften for Dubai Real Estate Market

• Residential: A downturn in rental and sales indexes seems to be defining the Dubai residential sector. During Q1 2016, the general REIDIN sales index recorded a drop of 10% Y-o-Y, while the general rental index declined at a slower rate of 5%. During the same period, 2,200 residential units have been added, taking the total stock to 458,500 units. These include a range of apartments, villas, as well as town houses across the emirate. Residential sales prices declined by 10% and 11% Y-o-Y respectively for apartments and villas. This could be attributed to a number of factors which include but are not limited to: (1) the strengthening US$ against international currencies which ultimately led to a fall in purchasing power and (2) the adverse market conditions on a regional front owing to the declining oil prices (Brent recorded a 23% Y-o-Y drop as of 13 April 2016).

• Retail: Average rents during the first three months of 2016 remained flat and occupancy rates at 92% continued to show strong momentum across the retail segment. In terms of supply, 233,500 sq m of GLA was added across Al Wasl, and Umm Suqeim Third. The largest completion was City Walk in Jumeirah. This takes the total stock to 3,397,300 sq m of GLA. The appetite in the market on the supply side is positive, and over the next 8 months, we are expecting further completions. This includes projects such as the Dubai Mall – Phase 2 (52,400 sq m GLA).

• Hotels: Occupancy rates during Q1 2016 declined a mere 2% to 84% Y-o-Y but these levels are still considered high. In terms of supply, 621 rooms were added, with the delivery of Hilton Garden Inn Mall of the Emirates and Ibis Styles Hotel.

*Hotel clock reflects the movement of RevPAR.