JLL's Dubai Real Estate Market Overview highlights generally negative market sentiment
“Affordability” is the word that has predominated Dubai’s real estate sector for Q1, 2018, according to the latest Real Estate Market Overview from JLL.
Pointing to what it calls “toughening economic conditions”, the sector is still beset by negative sentiment, especially when it comes to office property.
“With rents continuing to fall across the office and residential sectors, building owners and landlords are increasingly looking to incentivise in order to retain current tenants and have done so by setting more competitive prices and more attractive lease terms ,” said Craig Plumb, Head of Research, JLL MENA.
As a result, residential developers have offered smaller units at competitive prices in areas known for more affordable housing, such as Dubai South, Dubailand and Jumeirah Village Circle (JVC).
As new units coming onto the market all the time, rents and sale prices continue to fall, Dubai’s Real Estate Regulatory Agency (RERA) has floated the idea of tightening the regulations on off plan sales by requiring developers to own the land and contribute 50 percent of the total construction cost into an escrow account before launching pre-sales.
This emphasis on lower- to mid-range has percolated through to sectors such as hospitality, with hotel operators expanding this segment in response to growing demand. The opening of hotels in both the midscale and upscale segments continued across the city with the market set to see more openings from major international operators as well as local players.
In addition, retail rents across the board declined in Q1 2018, and with a number of retail brands vacating underperforming stores, landlords are offering further incentives to retain existing tenants.