By Andy Sambidge
Jones Lang Lasalle says rise in vacancies to impact residential, office and retail costs.
Real estate rents and prices in Dubai's residential, office and retail sectors will continue to decline in 2010 while vacancies will rise, according to a new report published on Monday.
Jones Lang LaSalle MENA’s Dubai Real Estate Market Overview said the property market in the emirate would continue to become more favourable for tenants.
"This trend is likely to continue into 2010 with increased vacancies and a continued decline in average prices and rentals across the market," the report said. It added that 2010 was likely to be characterised as a year of "selective stability".
"While average vacancies are expected to increase and average prices to fall, this will not be experienced uniformly across all projects or locations, with a flight to quality resulting in an increasingly two tier market emerging during 2010 in which better quality projects and locations will benefit from selective stability," JLL's report said. On Dubai's residential market, Blair Hagkull, managing director of JLL MENA, said: “Prices seem to have stabilised over recent months, despite the existing over-supply situation. Stabilisation of transactional volumes is another positive indicator of investor confidence but the lack of housing finance remains a major challenge in Dubai."
With an additional 24,000 units expected to be completed in 2010 and 25,000 units in 2011, there may be an emerging opportunity for both investors and financers in the Dubai residential market as it has already seen a significant level of pricing adjustment in 2009, he added.
Hagkull said vacancy rates in the Dubai office market were likely to increase from their current level of around 33 percent during 2010.
“The tenant is becoming the ultimate winner as the office market is going through a significant adjustment with more vacancies and cheaper rents on offer. This scenario is encouraging for businesses as it offers multiple options for expansion and relocation as Dubai becomes more competitive office location both locally and regionally," he said.
Dubai retail sector would also see a shift in favour of tenants in 2010, he said, adding that average rentals have declined by around 29 percent from Q4 2008 to Q4 2009 and by 13 percent from Q3 2009 to Q4 2009 on the back of a 15-20 percent decline in retail sales in 2009.
Hagkull said: “This is an interesting time as the dynamics of the Dubai retail market continues to swing in favour of tenants due to falling rents and increased vacancies in some centres.
"In spite of the cut back in future supply levels, we expect to see an increase in shorter leases, break clauses and rent free periods as we go through this tectonic shift in the market. There will be more and more incentives for tenants due to the shift in power from landlords to tenants."
come on now, this is really getting terribly boring. You are constantly collecting negative opinions of all kinds of people who think they know best what the future of the Dubai property market holds. Fact however is that we are all tired of your negative news. Its not what we want and its not what Dubai wants to hear/read. I know that there are plenty of people in Dubai who are positive and look forward to the future of Dubai. Is it so difficult for you to collect their opinion for a change. Probably it is, because for the Press Good News is boring. Well I can tell you, it is not.
We should really learn from our mistake. it is not any kind of negative news. these ideas are really helping those who are currently investing in DUBAI.. Demands and supply makes big difference.... this market is in the hand of BANKS ONLY.....
rents coming down is the biggest positive news...after all...if Dubai is affordable, people will come again start fresh
I agree with David Amhoff, please do not publish any bad news, good news only please so we can all pretend everything is rosy in this beautiful city.
While i enjoyed hearing that the rents are dropping and that rents are now in favour of th tenants, I have to wonder how valid AB's stories really are. I read this online paper every morning and the stories are always contradicting themselves on a day-to-day basis with a lack of sufficient evidence on either end. So, what's really happening??? Is it really that hard to get some legitimate answers on what to expect for rents in 2010? It's all nice and dandy to hear such great news, but the fact of the matter is that these perceptions are not shared on the floor. If you log into Dubizzle, BetterHomes or any other property finder, you will see that the rents have not changed dramatically in the last 6 months. Landlords are still asking for 1-2 cheques? Come on now! I don't think you will find many people willing for cough up that much money in one go. Landlords are also asking for 10-20% more on the value of there property... It's time to get realistic. I plan on moving very soon, but not until I'm comfortable with what's happening on the floor.
Paul Amhoff, I am afraid that having your head in the sand will nobody any good. While true that Dubai does have some positive things going, people need to be informed that a full recovery MAY not be forthcoming as yet.
OK here we go "Dubai is a positive, vibrant place and you should come here to live where you can live your dreams...dont believe all the stories about debt, oversupply, excessive service charges, treatment of workers....thats all negative and we dont talk about that....we just want you to live the dream and if you lose money just remain positive" Wake up Mr Amhoff....the point JLL are making is positve....yes there is signficant oversupply which is not good news for investors, developers etc but it is good news for tenants and buyers if they plan to live in the house they buy. All the GCC countries thought that things only went one way and they could have their cake and eat it.....now comes the reality of market cycles....yes things will turn around but it will take time and it will take change in a number of countries to move the market forward
it was nice reading this news, but not until i was surprised to see my renewed contract in which the landlord increased my rent by another 10K........... i have given up thinking about this, it wont change
RERA when are you going to update your rental index and calculator? My landlord has taken advantage of your outdated index to push for a further 20% increase. The landlord's agency Al Yousuf R/Estate insists that it is legal to increase the rent
@ Alexis, some of the landlords are not sure what to charge with all the conflicting reports. Make sure you at least argue. Moving may or may not be worth it for 10K but at least call his bluff. There are plenty of vacant places