Cluttons, the real estate specialist that has enjoyed a dedicated Middle Eastern presence since 1976, today announces its market report for Dubai’s commercialand residential markets.
According to the report, there is hope that the market is nearing the bottom of the cycle, with rents dropping at a slower rate than Q1 2011. In selected areas the residential market has even demonstrated modest growth. The Arab Spring has been well publicized in the media to date, but Cluttons notes that demand from Bahrain and Egypt has not yet affected the market expecting the effects to become evident in Q3 and Q4 2011.
Commercial Sector: Market Overview
The market still faces the same downward pressure on rents seen throughout 2010, with rents in new business districts such as Tecom C, Busines Bay, Jumeirah Lakes Towers (JLT) and Dubai Silicon Oasis hit hardest in terms of price reduction. 2011 is expected to carry around 10 million square feet of office stock onto the market.
Whilst supply has increased hugely, there is still a shortage of good office stock and single owner buildings outside of Freezone areas, suitable for businesses that hold a standard Dubai trade license.
Residential Sector: Market Overview
Dubai residential rates have continued to fall, but the rate of decline has slowed significantly, with apartment rental values falling between 3.5% - 10% on Q1 2011. The high-end villa market has proved to be more resilient and has counteracted predictions that prices would soften over the past quarter; in some areas rents have increased by approximately 1.5 – 3%.
Time will tell whether price recoveries are an anomaly or a sign that the market has reached the bottom. In addition, Cluttons predicts that the summer months of Q3 2011 will bring a resistance to any growth in all sectors.