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Residential and Hotels See Further Softening While Retail and Office Sectors Remain Stable in A Quiet Q2
JLL, the world's leading real estate investment and advisory firm, today released its second quarter (Q2 2015) Dubai Real Estate Market Overview report that assesses the latest trends in the office, residential, retail and hotel sectors.
Craig Plumb, Head of Research at JLL MENA, commented: "The Dubai real estate market continues to face downward pressure during the second quarter of the year. The residential rental index has remained relatively flat while sale prices have dropped an average of 8% since June 2014. This comes as records from the Dubai Land Department show a 69% decline in the number of residential transactions in the first half of the year compared to the same period in 2014. This single digit price correction is in sharp contrast to declines we witnessed in 2008/2009 and is a clear indication that the market is maturing. We expect transaction volumes, and subsequently sale prices, to drop further in the second half of the year. "
"Faced with new supply and a limited increase in net absorption, the commercial sector is stable and should remain so in the short to medium term given the 1.2 million sq m of Gross Leasable Area expected to enter the market over the next couple of years. The plans announced by the Dubai International Financial Center to triple in size by 2024 will solidify Dubai's position as the regional business hub and positively impact office market performance in the long-term."
He continued: "Retail performance has been steady during the second quarter, with no noticeable increases in rents across the different mall types. Retail sales, particularly in the luxury segment, have slowed, driven primarily by the decline in tourist numbers from Russia, while the current level of market saturation in the food and beverage segment is expected to put pressure on retailers to differentiate their offerings in the face of strong competition. "
Chiheb Ben Mahmoud, Head of the Hotels & Hospitality Group at JLL MEA, added: "The Dubai hotel sector maintains its position as the strongest in the region, amid continued softening of the activity indicators. Q2 continued to reflect the impact of the drop in the number of tourists from Russia and the Eurozone. ADR adjustments allowed the impact on the city occupancy rate to be relatively limited remaining in the range of the ten-year historical average. Translating the push for competitiveness, the ADR for Q2 2015 stands at 7.2% lower than the ten-year historical average, highlighting the need for hotel owners and operators to focus on operational efficiencies."
SECTOR SUMMARY HIGHLIGHTS – DUBAI:
Dubai prime rental clock
*Hotel clock reflects the movement of RevPAR.
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