By Staff writer
Deloitte report says residential and hospitality markets have rebalanced towards a 'new normal' in H1 2016
Dubai's residential and hospitality markets have rebalanced towards a "new normal" in the first six months of 2016 and real estate prices will continue to fall for the remainder of the year, according to Deloitte.
Its new report predicted that although residential sale prices will decline further in Dubai over the coming months, the rate of decline will slow, as value and affordability returns to the market.
Deloitte said the falling prices reflected "a transition to a more mature market", as well as an increase in more affordable stock and discounting in emerging locations.
Data for the first six months of 2016 showed that residential sale prices have continued to decline in Dubai. Prices for Palm Jumeirah apartments declined by 3.8 percent between January and June, while prices for Downtown apartments declined by 1.8 percent over the same period, Deloitte said.
It added that year on year data indicates that overall, residential sales prices in Dubai declined by 3.8 percent to June.
On Dubai's hospitality market performance in 2016, Deloitte said it predicted strong levels of demand for serviced apartments in Dubai driven by increasing visitor numbers from key source markets, growing visitor demand for longer average lengths of stay and better value accommodation.
In the first half of 2016, data from the Dubai Department of Tourism and Commerce Marketing (DTCM) showed that serviced apartments experienced the highest occupancy of any hospitality category in Dubai, at 83 percent.
Average hotel occupancy in Dubai in the first six months of 2016 was 77 percent, slightly ahead of Deloitte's forecasts as hotel operators continued to discount average daily rates in an effort to maintain occupancy.
On Dubai's office market performance, Deloitte predicted that completions of a number of new office schemes could lead to a slowdown in rental growth in some submarkets, with the power of negotiation shifting from landlords to tenants.
Deloitte said it anticipates that these trends are likely to continue in the second half of 2016, with further completions in secondary locations giving tenants greater negotiating power.
The report also predicted that Dubai's retail market would see a moderation in sales growth for the remainder of 2016 against a strong dollar and economic uncertainty in key source markets.
"We predict that a return to higher oil prices combined with robust tourism and population growth, are likely to support a return to growth in retail sales from 2017 onwards," Deloitte said.