(MENAFN- Khaleej Times) Rents and prices are expected to remain relatively stable in Dubai over the remainder of 2014 irrespective of a raft of new project announcements, real estate advisory company Jones Lang LaSalle said on Sunday.
JLL predicted that the market would behave in a more sustainable and healthy manner as the various new project announcements will have no immediate effect on supply.
In a new report released, JLL said property values in Dubai recorded increased over the past year with the third quarter seeing more subdued growth levels in both apartment and villa sale prices and rents.
The average rents and sale prices grew by just two per cent and one per cent respectively in the third quarter, down from three per cent and six percent in the second quarter, JLL said in its Q3 2014 Dubai Real Estate Market Overview report released at Cityscape Global.
"Driven by tighter government regulations and an increasing mismatch between buyer and seller expectations, the residential sector is now experiencing a welcomed period of stability," JLL, the real estate investment and advisory firm, said.
Craig Plumb, head of research at JLL Mena, said the Dubai real estate market saw a welcome levelling-off during the summer months. "The broad based recovery witnessed in the residential sector over the past 18 months has now slowed down, as rental prices and sale values have stabilised in most locations," he said. Plumb pointed out that while new projects continue to be announced, these have no immediate impact on supply as they are phased over a longer timeframe.
"Although the hotel sector underperformed over the month of July, registering 50 per cent occupancy rates, it is expected to trend upwards into the peak season in the last quarter of the year. Elsewhere in the market, the retail segment maintained its solid growth while the recovery of the office sector remains patchy, as high levels of supply continue to constrain the market."
In the office segment, the third quarter continued to see a two-tier office market. While prime central business district rents have remained stable over the quarter, they are expected to increase as demand remained strong for Grade-A office space. "Meanwhile, rents in secondary locations are expected to remain under downward pressure as more Grade-A office space enters the market by 2015. On the demand side, corporates are becoming increasingly aware of the importance of sustainability. As traffic congestion increases, tenants and therefore owners are also paying more attention to access and parking issues," it said. In the retail segment, the market has witnessed the completion of two projects in the third quarter of 2014. Discovery Gardens and Jumeirah Park Community Centres have increased the total retail stock to 2.9 million sqm.
"While size still matters [Mall of the World], some developers are shifting their focus to community and neighbourhood centres that capture the attention of residents, and generate additional recurring revenues as opposed to cyclical residential sales. Three such malls are scheduled for completion over the last quarter of the year," JLL noted.
In the hotel segment, the year to August saw occupancy rates and average daily room rates remaining largely unchanged. On the supply side, the third quarter of 2014 saw the opening of the Warwick Hotel on Shaikh Zayed Road and Doubletree by Hilton JBR, increasing the current hotel stock to 62,800 keys.
"While the remaining three months of the year are expected to witness some openings, the sector is likely to maintain its strong performance as Dubai continues to position itself as a leading tourist destination," it said.
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