Stabilising rents, smaller community malls and a fledgling recover in the hotel sector will be key themes in the UAE’s real estate market in 2011, Jones Lang LaSalle said.
In a report, the real estate consultancy said declining rental levels will continue to dominate the UAE’s rental sector, but said Dubai’s market was approaching bottom.
“In Dubai, rents continue to fall, but the rate of decline is shrinking and there are strong indications that many segments are approaching the bottom. In contrast, rents in Abu Dhabi are expected to continue to decline in the year ahead,” the report said.
Sales transactions will remain subdued in 2011, analysts said, in part because of a shortage of investment-grade properties at realistic prices.
Outside of the residential real estate market, commercial properties are forecast to perform well this year with the hospitality industry earmarked as the first to recover.
“The UAE’s hospitality sector will see a departure from the grandiosity of previous projects, often driven by publicity and ego, and a return to fundamentals,” the report said.
JLL forecast a stronger focus on budget hotels and a rebranding of some of the older hotel properties in the UAE.
A similar change is expected within the retail sector, which will see an additional 140,000 sq m of space come online in 2011. Changing market dynamics will prompt a shift away from mega malls and to smaller community-focused shopping centres, the report said.
“The market for super-regional malls, driven by tourism and built as entertainment driven destinations, is now saturated. In terms of new development and repositioning of existing projects, the next opportunity is community-oriented retail centres, with a focus on meeting the needs of residents within the catchment neighbourhood.”