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REIDIN - UAE MediaWatch

Daily, Dubai
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Dubai residential market prices back to early-2008 levels

Apr 16, 2012
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The Dubai residential real estate market appears to have bottomed out as prices are now at rates similar to early 2008 levels and the general rental trend being positive, Jones Lang LaSalle said on Monday.



Dubai is expected to see completion of 28,000 new units in 2012 with Dubailand and Jumeirah Park likely to see completion of 4,380 and 4,242 units, respectively.



Other freehold locations that will see additional supply are Dubai Marina (3081 units), Jumeirah Village (3891 units), Dubai Silicon Oasis (1956 units) and International City (1,813).



Approximately 3,000 additional residential units were added to the market in the first quarter 2012, bringing the total current residential stock to around 341,000 units.Almost 90 per cent of the completions in 2011 were apartments, JLL said in its first quarter report on Dubai real estate.



The 44 per cent of residential stock added in the first quarter is located within the submarkets of International City, Dubai Marina, Discovery Gardens, Jumeirah Lakes Towers and Dubailand.



Real Estate Regulatory Agency CEO Marwan bin Ghalitha has said that Dubai will see release of 16,000 units this year. JLL’s estimate is 75 per cent higher than Rera’s assessment.



“While liquidity is returning to the residential market and some previously stalled projects are recommencing, we expect that a substantial proportion of the supply due to enter the market in 2012, much of which was initially due to complete in 2011, will experience further delays,” the report said.



Quoting the Reidin Residential Sale Indices, JLL said the residential market “looks to have bottomed out,” with prices currently at rates similar to early 2008 levels.



Despite seeing a sharp fall from its peak levels in the third quarter 2008, the villa market began to see some uptick towards end-2011.



“This trend has continued into 2012 with sale indices now three per cent higher than in January 2008,” the report said.



Villa sale indices are still 25 per cent lower than at their peak in third quarter 2008. Apartment sale indices have also begun to stabilise, but remain at lower levels, 34 per cent down on the peak in Q3 2008.



Reidin rent indices from January 2009 show a similar trend with villas back at 2009 levels by the beginning of 2012.



“The general rental trend across the market is positive. Whilst villa rents have increased five per cent, apartments are 30 per cent lower relative to 2009 levels and continue to lag,” the report said.



The general residential indices 12 per cent higher than in first quarter 2011. The villa market is expected to continue to outperform the apartment sector. The prime residential assets in well established locations continue to see improved performance, while secondary buildings and locations are still suffering from rental and pricing declines, JLL stated.



Prime office rents steady



Office rents in prime locations remain stable for the first quarter. Vacancy rates within the Central Business District (CBD) have increased slightly over the quarter to around 35 per cent, while city-wide vacancies continue to increase in the face of additional supply. The average vacancy rate in Business Bay, however, is around 90 per cent and the area continues to suffer from very limited demand.



“Although prime buildings are witnessing stable rental levels, secondary locations are expected to see further rental decline in 2012 due to the large proportion of new supply and weak tenant demand that is further exacerbating the supply-demand imbalance and the two-tier nature of the Dubai office market,” JLL said.



The total city-wide office stock stood at approximately 5.8 million sqm at the end of Q4 2011.



Around 45,000 sqm was added to the market during the first quarter of 2012



While many announced projects are currently “on hold“, there remains almost one million square metres of additional supply that could be completed in 2012. A total of 1.4 million square metres is due to enter the market by the end of 2013 - the majority will be delivered in Dubai International Financial Centre, Business Bay and Jumeirah Lakes Towers.



Source: www.Emirates247.com