Emirate’s property sector significantly slowing, says JLL
The Dubai real estate market cooled in 2015 after expanding significantly in 2013 and the first half of 2014.
That’s according to a new report from property services provider, Jones Lang LaSalle (JLL), which also cited lower oil prices and the appreciation of the US dollar as the cause of reduced real estate demand. These two factors weighed on the performance of key sectors such as retail and tourism, discouraging Europeans and people from countries with non-USD-pegged currencies from visiting.
The review also explained how the delivery of 700,000 sq m of office space in 2015 has increased total stock to 8.3 million sq m. Looking ahead, an additional 600,000 sq m of gross leasable area (GLA) is expected to be delivered between 2016 and 2017, with around 35% of the proposed supply expected in Business Bay.
Commenting on the findings, Ray Hogan, Oryx World Portfolio managing director, says, “We are looking forward to the increase in office leasable area supply in Business Bay over 2016 and 2017.
“At Oryx World Business Center & Services, we strive to stand out from future competitors by maintaining a high-quality and personalised service in the complete company formation process, from beginning to end. This stands for all current and future clientele,” he adds.
The report also covered Dubai’s residential market. It said that completions across the UAE in 2015 remained lower than in recent years, a trend likely to continue into 2016.
A total of just 7,800 residential units were delivered in Dubai throughout the year, compared to the scheduled delivery of 25,000. This suggests that much of 2016’s proposed supply (26,000) will not be delivered on schedule.
In terms of retail space, the report claimed that Dubai released 193,000 sq m of GLA, dominated by extensions to Mall of the Emirates and Dragon Mart. Future supply will come from large extensions to The Dubai Mall, CityWalk, Dubai Festival City and Ibn Battuta.
This mall supply is expected to increase 19% over the next two years, causing an oversupply. Coupled will lower demand, this is expected to reflect negatively on the sector’s performance.
Finally, the hotel market saw the addition of 2,700 rooms in 2015, taking the total supply to 67,100. More than 18,000 new rooms are forecast for the next two years, which, the report says, is expected to add further downward pressure on average daily rates (ADRs).
Looking ahead, Dubai’s hotel market is expected to pick-up from 2017 with the delivery of Dubai Parks and in the run up to Expo, where the government is expecting 20 million guests by 2020.