Dubai’s residential value of transactions increased by 11% in H1 2017
Posted on 18th October 2017
Dubai’s residential sales market has witnessed solid growth this year with the total value of transactions increasing 11 per cent in the first half of 2017 over the same period last year, according to a report by the global real estate consultancy CBRE.
This was mainly driven by growth in overall transaction numbers, which rose by close to 29 per cent, said CBRE in its Q3 2017 Dubai Market View.
However, average sales prices experienced a minor dip, falling by around one per cent, stated the industry expert citing data from Dubai Land Department.
A similar scenario was evident in the residential leasing market with average rentals falling by 1.5 per cent from the previous quarter, although there were some notable variations in performances at a sub-market level, the report added.
Mat Green, the head of research and consulting UAE, CBRE Middle East, said: "The disparity between rising deal volumes and the performance of the leasing sector demonstrates how investors appear to be taking a longer-term view on the residential market, looking beyond softening rentals and focusing on the availability of attractive prices and the increasing flexibility of payment plans offered across both completed and off-plan projects."
However, future supply levels continue to grow, with an array of new projects announced during the quarter, including a new joint venture between Meydan and Sobha Group, ‘The Residences’ in Mohammed Bin Rashid City, Nakheel’s ‘Palm Residences’, and Wasl’s new flagship development ‘Wasl One’ located in Al Kifaf area, he noted.
According to CBRE, Dubai’s prime office market continued to witness stability in terms of lease rates.
A total of 85,000 sq m of new office accommodation was completed during the quarter, including the handover of the National Bank of Abu Dhabi headquarters in Al Jadaf and Building C3 at Dubai Trade Centre District (DTCD), it stated.
Cityscape Global 2017 witnessed the successful launch of District 2020, a large mixed-use scheme which will provide high quality office space to the market in the lead-up to Expo 2020, said the CBRE in its report.
The project, including offices, retail, hospitality and residential components, is expected to be handed over in Q4 2021 following the Expo, it added.
"Average prime and secondary rentals have remained steady since the fisrt quarter of 2016, with rates recorded at Dh1,916 per sq m annually for prime offices and average of Dh1,014 sq m for secondary office rents," explained Green.
"The ongoing permanence of rents underlines the relative scarcity of good quality office accommodation in key areas, although future pipeline levels are now starting to rise again after a flurry of major new launches," he added.
According to the CBRE report, Dubai’s retail demand remains heavily orientated towards the major shopping centres, with prime malls continuing to demonstrate very high occupancy rates and stable leasing rates.
Trading conditions for smaller community and regional centres and non-mall formats have become more testing, according to Tradearabia news report.
As a result, retailers are increasingly looking for flexibility from landlords to help soften the impact of changes in sales volumes. Development activity across the retail sector remains buoyant with approximately 1 million sq m of gross leasable area set to be handed over between 2017 and 2019, stated the report.
On the hospitality sector, CBRE said the demand levels in Dubai have remained quite robust with occupancy rates reaching 75.4 per cent for YTD (year-to-date) August figures, representing a 0.4 per cent increase from the same period in 2016, as per figures from STR Global.
The property expert said around 28,000 hotel keys and 7,500 hotel apartment keys are expected to be delivered by the end of 2019.
The sizeable additional room supply will help to keep affordability levels in check, which is important as the emirate tries to reach 20 million visitors by 2020, it stated.
"Limiting price competition by increasing communication between properties, as well as offering packages during the low season instead of only competing on rates, are some of the initiatives that have been put forward by the hospitality industry to enable Dubai to continue its positive evolution as one of the world's key tourism markets," remarked Green.
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