Prime retail space is expected to experience the largest price hike, says RICS report
Dubai commercial property rents will rise 5 percent this quarter, according to a survey by the Royal Institute of Chartered Surveyors (RICS).
Prime retail space is expected to experience the largest price hike, with demand rising for the fifth consecutive quarter.
“There is a large divergence between prime and non prime retail space, with large ’super-malls’ outperforming the rest of the retail market in terms of footfalls, sales volumes, rents and occupancy rates,” the RICS report said.
However, in contrast, an oversupply of office accommodation has caused vacancy rates to increase to an average 30 percent across Dubai and rents expectations are still negative for the second quarter.
Prime properties in areas such as Business Bay and Downtown are in demand but the tier two space is weak.
Arabian Business reported last month that some uncompleted developments that had been intended for offices have been converted to residential and hospitality accommodation because of the poor market.
The RICS survey also found commercial development starts continued to rebound in the first quarter of 2013 after some gloomy years following the financial crisis, with starts rising at a quicker pace so far this year than in 2012.
The investment market also recorded strong positive results, with investment transactions rising and capital values on a recovery path. Much of this is due to instability in neighbouring markets and Europe.
The flow of distressed assets coming to the market also has stabilised in recent quarters and is expected to continue in a positive sign for the emirate.
“The survey provides further evidence of a sustainable strengthening in the region’s economy,” the RICS report said.