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Dubai Real Estate Market Overview - Q1 2011

Q1 2011 Highlights:
  • The office market continues to see new supply entering the market pushing citywide vacancy rate to 44%. Prime rent declines abated, with average prime rents remaining stable in Q1 2011 after a hefty 21% decline in Q4 2010;

  • Retail malls continue to experience vacancies of 15% to 30% as supply increases and retailers take advantage of increased competition between centres;

  • Average rental rates continued to decline in the residential sector, but the rate of decline has slowed. Provided mortgage availability improves, lending rates remain low or fall further, and the government improves residency visa rules for property purchasers, we believe 2011 will see the build up of buying momentum and selective price stabilisation;

  • Hotels have experienced improved occupancy due to increased tourist arrivals in the first two months of the year. While the wider hotel sector is in the process of stabilising and ADRs will remain depressed over the year, established beach hotels have reached the bottom and will outperform city hotels in 2011.

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