Dubai house prices close to bottomming out

Residential sales prices declined by 10 per cent and 11 per cent year on year for Dubai apartments and villas respectively in Q1 2016.

Residential prices in Dubai are close to bottoming out, says real estate advisory firm JLL. For investors waiting on the sidelines for prices to fall further, the time to act is now.

Residential sales prices declined by 10 per cent and 11 per cent year on year for Dubai apartments and villas respectively in Q1 2016. The Reidin rental index declined at a slower rate of five per cent.

"Various factors are bringing the market towards the bottom of its cycle. On one hand, the strong dollar is impacting the US dollar-pegged GCC currencies which is making Dubai real estate more expensive for buyers from non-USD pegged markets. On the other hand, the continued period of low oil prices is tightening regional liquidity which is also affecting the real estate market," said Craig Plumb, head of research at JLL Mena.

During the first quarter, 2,200 residential units - apartments, villas and townhouses - were added in Dubai, taking the total stock to 458,500 units.

While JLL has mixed sentiments on the short to medium-term outlook for the Dubai real estate market, it is confident on the long-term outlook due to demand drivers such as the Expo 2020 and other mega infrastructure developments.

The office market continues to be the worst performing sector and has been has been stuck at the bottom of the cycle for several years. The first quarter saw the handover of B2B Office Tower and the new Dafza building in Business Bay and Dafza respectively. The two towers added 38,400 sq m of office gross leasable area.

"We are witnessing some select activity and momentum for Grade A office buildings which continue to generate strong demand," added Plumb.

In the hospitality sector, although occupancy rates are still high, average rates continue to drop. Occupancy rates during Q1 declined two per cent to 84 per cent year on year. In terms of supply, 621 rooms were added, with the delivery of Hilton Garden Inn Mall of the Emirates and Ibis Styles Hotel.

Meanwhile, JLL is optimistic about prospects for the retail sector. Average rents during the first three months of 2016 remained flat while occupancy rates stood at 92 per cent. The largest completion was City Walk in Jumeirah.
"Over the next eight months, we expect further completions. This includes projects such as the Dubai Mall - phase 2," Plumb informed.

- business@khaleejtimes.com