dubai property market to remain challenging this year
News Posted On: 08 February 2012
The property market in Dubai is expected to remain somewhat challenging this year, even though certain areas have seen stability and even growth during the last few months. The residential property market is expected to perform more strongly than the office market.
According to the report by CB Richard Ellis, one of the major problems still remaining is oversupply, and this had the effect of causing rental rates for apartments to decline by 2% during the fourth quarter of last year, although villa rates remained the same.
Nevertheless investor interest is returning to the market, especially in communities with good facilities and amenities. Last year average apartment lease rates dropped by 8%, with the biggest decline being seen for studio units.
This was substantially less than in 2010 when lease rates fell by an average of 17%. Villas and townhouses are performing significantly better due to a limited supply of units and stronger demand. Rents for villas and townhouses fell by just 6% during last year, while in 2010 the level of decline was more than double.
However there is a huge amount of property which is due to be completed over the next year or so, and CB Richard Ellis expects the commercial sector to remain subdued throughout the year. It thinks as much as 750,000 m² of new stock could come onto the market during this time provided construction isn't delayed.
The report expects leases within the central business district to remain stable during the year, but also thinks that the number of landlord incentives will increase due to rising competition to secure tenants. Rents for prime office space have remained unchanged for the last year, and it's expected that tenants will continue to seek out quality properties so prime offices will outperform the rest of the market.
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Written by Les Calvert
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