Dubai's real estate sector is on track to record "selective growth" as rents and values continue to improve for prime properties in the hotel, retail and residential sectors, leading real estate consultancy company said.
Jones Lang LaSalle, or JLL, said in its Dubai Real Estate Market Overview that despite demand for high quality retail space, most sectors of the Abu Dhabi market remained tenant-favorable, with rents yet to bottom out.
The Dubai real estate market remains the more robust market
"Within a general atmosphere of improving investor confidence and an optimistic business outlook across the UAE, the Dubai real estate market remains the more robust market, seeing steady rental and price growth for prime assets in the hotel, retail and residential sectors," the report said.
Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market
"Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market, but we are continuing to move away from one holistic model. As the market continues to mature we will see more divergence," said Alan Robertson, CEO of Jones Lang LaSalle Middle East and North Africa. He said well-managed, high-quality assets in prime locations will continue to perform whilst those in secondary locations will need to be ever more creative to attract and retain tenants who now have ever more choice and are moving with their feet to source and find the best deals available "In terms of market specifics, it is a very fragmented picture. Dubai is generally ahead of the curve as rents are finally starting to pick up whilst indicators suggest Abu Dhabi has yet to bottom out," he said.
Retail remains a driving force with significant opportunities in both emirates
In terms of sectors, retail remains a driving force with significant opportunities in both emirates. On the investment and development fronts, JLL expects to see more major deals announced in the weeks and months ahead, reflecting the improved economic climate. "However, we also expect the market to move away from a construction led environment to one more focused on asset management as owners look to safeguard their investment and drive rental growth."
Dubai GDP is projected to grow by 4.5 per cent in 2012
The report noted that the Dubai economy was still on a recovery path. Gross domestic product is projected to grow by 4.5 per cent in 2012. This performance is being driven by the strong growth of key sectors such as tourism, commerce, retail, hospitality and logistics. JLL said the real estate investment market has been quiet over the summer months, with no major open market commercial transactions reported in this seasonally quiet period.
The villa market continues to outperform the apartment sector
The overall residential market has recorded another positive quarter, with the villa market continuing to outperform the apartment sector in the third quarter. Prime residential buildings in well-established locations continue to see improved performance, but secondary locations are still suffering from rental and pricing declines as tenants relocate to new high quality projects.
The report noted that there remains strong demand for retail space in the best performing super-regional shopping malls. "However the retail market is becoming increasingly two-tier and older, less popular malls are seeing weakened demand from consumers and retailers, with mall owners having to consider new marketing techniques and product positioning."
Khaleej Times
3 October
