New report shows market cooling off during Q4; likely to remain subdued in 2015
Dubai's residential and hotel real estate markets are peaking as lower oil prices dampen sentiment, with rents expected to started falling going forward, consultants JLL said in a report on Sunday.
The residential market surged early last year on the back of a strong economy, with rents up 15 percent and selling prices up 20 percent in 2014 as a whole. But activity cooled considerably in the fourth quarter, JLL said.
"Dubai's real estate sector ended the year on a quiet note as nearly all segments of the market witnessed subdued growth levels in Q4," it said.
"Average prices and rentals in the residential sector appear to have stabilised over recent months, with some locations registering marginal declines."
It noted that according to Dubai Land Department data, the number of residential transactions dropped 30 percent last year and their value fell 14 percent.
JLL predicted: "The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015," though it added that in reality, not all of those projects might be delivered on time.
The consultancy said that in the property cycle, Dubai's residential market was now passing from slowing rental growth to a phase of falling rents, while the hotel market was marginally behind that point in the cycle.
The retail sector is still in a period of slowing rental growth while the office market remains early in the phase of accelerating rental growth, it said.
the above info is only for the areas which were high end such as downtown, Dubai Marina, Jumeirah Park etc where the units are having big sizes and prices were sky rocketting. But in some areas the market have improved such as JVC, JVT, if u compare from November 2014 to Jan, 2015 For example, JVC i had apt at 950 AED per sq ft and now i m getting 1090 AED per sq ft.
My rent was expected 92,000 whereas I found a tenant for 2 bed at 100,000 per annum
the mentioned fall in price and rents are related only to the freehold areas. the data has no connection whatsoever with the rents in areas like deira and burdubai where landlords irrespective of the market conditions are free to increase rents each year by 20% and they cannot even be challenged in rera.
It is not so easy to predict the property market in Dubai when reading contradictory news. I rented out my new apartment in JVC, 1 bdrd, for 72K starting Jan 2015. Is this an increase or decrease not easy to say. We shall see what happens after a year. With the oil price declining, though, there is definitely an impact to the labour and financial markets in UAE, specifically in Dubai, which in turn will impact the real estate market.