By Shane McGinley
Budget hotels, community malls and stabilising rents to dominate UAE real estate in 2011
Stabilising rents, smaller community malls and a fledgling
recover in the hotel sector will be key themes in the UAE’s real estate market
in 2011, Jones Lang LaSalle said.
In a report, the real estate consultancy said declining
rental levels will continue to dominate the UAE’s rental sector, but said Dubai’s
market was approaching bottom.
“In Dubai, rents
continue to fall, but the rate of decline is shrinking and there are strong
indications that many segments are approaching the bottom. In contrast, rents
in Abu Dhabi are expected to continue to decline in the year ahead,” the report
Sales transactions will remain subdued in 2011, analysts
said, in part because of a shortage of investment-grade properties at realistic
Outside of the residential real estate market, commercial
properties are forecast to perform well this year with the hospitality industry
earmarked as the first to recover.
“The UAE’s hospitality sector will see a departure from the
grandiosity of previous projects, often driven by publicity and ego, and a
return to fundamentals,” the report said.
JLL forecast a stronger focus on budget hotels and a
rebranding of some of the older hotel properties in the UAE.
A similar change is expected within the retail sector, which
will see an additional 140,000 sq m of space come online in 2011. Changing
market dynamics will prompt a shift away from mega malls and to smaller
community-focused shopping centres, the report said.
“The market for super-regional malls, driven by
tourism and built as entertainment driven destinations, is now saturated. In
terms of new development and repositioning of existing projects, the next
opportunity is community-oriented retail centres, with a focus on meeting the
needs of residents within the catchment neighbourhood.”
I thought there was increasing pressure for people who are employed by companies in Abu Dhabi to live in Abu Dhabi and as rents go down there, vacancies rise in Dubai. At least at the Marina/Jebel Ali end of town. Was it not Jones Lang LaSalle who recently estimated a further 25,000 residential units to be delivered in 2011 into a market that already has a 40 per cent vacancy rate. So if several thousand relocate to Abu Dhabi but that's counteracted by a few thousand relocating from the Northern Emirates the market still can't reach the bottom. Plus purchasers of many of the new apartments may elect to live in them and vacate existing tenancies.
Therefore the number of rental properties available and empty must logically go up and rents continue downward hroughout the year.
@Red , you are forgetting that rents in Abudhabi are still ridiculously high. A one bed apt with shared pool , private parking in new building in Abudhabi would set you back 120 k to 140k depending on size. However a better quality 1 bed apartment in Dubai Marina would cost you around 60k a year. So do your math. Even if 25000 or even 50,000 apartments come online in Abudhabi , people would not relocate unless rents come down drastically. Which again means rents softening in Abudhabi. Suppose Dubai market falls further and you can let 1 bed for 40k in Dubai Marina, people would still move from Abudhabi to Dubai. It would always be quality and affordability and not number of units hitting in market in Dubai or Abudhabi.
All smoke and mirrors
Didn't i read the same story about end of 2009, fist quarter 2010, second quarter 2010.................................??