Plenty to pick and choose in Dubai realty
Deloitte’s predictions for 2016 indicate good prospects for office properties
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Investors would still do well picking and choosing between the many investment options Dubai realty has to offer this year. This is despite all indications suggesting the current softness will continue to be there for a while yet.
“It is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors,” said Robin Williamson, Managing Director at Deloitte Corporate Finance Ltd., which issued an overview of the state of the Dubai property market.
“Over the past 13 years, Dubai has experienced development on a scale and to a standard like no other real estate market globally.
“Despite the decline in average residential sales prices in Dubai during 2015, price growth over the last four years reflects a compound annual growth rate of 11.6 per cent, which outperforms other leading global cities such as London, Paris and Singapore.”
In what the market can expect this year, Deloitte states, ‘2015 saw average residential sales prices across Dubai decline by approximately 10 per cent and in 2016 … so it is predicted that average residential prices will decrease further, reflecting a transition to a more mature market.
‘Whilst published pipeline forecasts estimate that some 40,000 units will get delivered in 2016, consultations with key developers suggest that a more realistic number will be approximately 10,000 units.’
For the city’s office property space, the consulting firm reckons rental gains will be ‘slow in some submarkets as a result of supply growth and the power of negotiation will, in general, shift from landlords to tenants in 2016.
‘There will be a trend towards more mixed-use office led developments and a greater allocation of space to amenities, which will enable schemes to differentiate against competition as well as a strategy for developers to diversify risk and generate more robust cash flows.’
Landlords holding spare office space could be in with an advantage. ‘Given the shortage of high quality office space in Dubai, some companies will be more amenable to leasing additional space than is required at present to accommodate future expansion, with a view to subletting surplus space in the short term,’ the report adds.
For the retail sector, ‘Rental growth will be relatively flat in 2016, with the exception of super prime malls, and some secondary malls will need to incentivise the major retail groups to retain brands.
‘The F&B retail will go from strength to strength in 2016 driven by greater brand penetration and expansion, and it is envisaged that there will be good prospects for fashion retail following the successful completion of the initial phase of Dubai Design District.’
credit to Gulf News