By Andy Sambidge
Jones Lang LaSalle report says rents rose 2% while prices increased by 1%, down from 3% and 6% in Q2
Dubai's real estate market saw more subdued price growth during the third quarter of the year, according to a new report by Jones Lang LaSalle.
Its Q3 2014 Dubai Real Estate Market Overview report said that average rents and sale prices grew by just two percent and one percent respectively in Q3, down from three percent and six percent in Q2.
JLL said that the emirate's residential sector is now experiencing a "welcomed period of stability", driven by tighter government regulations and an increasing mismatch between buyer and seller expectations.
"As the various new project announcements will have no immediate effect on supply, rents and prices are expected to remain relatively stable over the remainder of 2014, with the market behaving in a more sustainable and healthy manner," the JLL report said.
Commenting on the report, 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.
"While new projects continue to be announced, these have no immediate impact on supply as they are phased over a longer timeframe."
The report added that the third quarter of 2014 continued to see a two-tier office market in Dubai. While prime CBD rents have remained stable over the quarter, they are expected to increase as demand remains 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, JLL said.
The report added that the year to August saw occupancy rates and average daily room rates remain largely unchanged year-on-year.
"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," JLL said.
Plumb added: "Although the hotel sector underperformed over the month of July, registering 50 percent 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."