The real estate market in Dubai has maintained its positive performance in the second quarter (Q2) of 2014, says real estate investment and advisory firm JLL in its Q2 Dubai Real Estate Overview report.
Although the residential sector saw prices and rents increasing across most areas, there are signs that the rate of growth is slowing down as Q2 experienced a marked slowdown in the volume of residential sales, particularly in respect of existing villas," said Craig Plumb, Head of Research at JLL MENA.
According to Plumb, while the retail and hotel sectors continue to experience growth, recovery in the office sector remains patchy with the large level of supply and high vacancy rates placing pressure on overall rental values.
"The major news about the proposed Mall of the World reflects confidence for both the retail and hotel sectors," said Plumb.
Although the residential sector saw prices and rents increasing across most areas, the rate of growth has started to slow from that seen earlier in the year.
Average sale prices grew six per cent in Q2, down from 10 per cent in the previous quarter.
With signs of reduced sales activity (particularly in the secondary villa market), it is likely that asking prices in this sector will decline further in coming months, the report said.
Sales volumes have declined in all sectors recently, with data from the Dubai Land Department showing villa sales in May 2014 declining almost 50 per cent against same month in 2013.
In the office segment, while continued economic growth has improved sentiment and generated demand for commercial space, the high level of both current vacancy and future supply continue to constrain the market.
"The Dubai office market operates as a number of quite different sub-markets, based upon location, tenure (strata or single ownership), licence structure (free zone/onshore) and quality.
While overall market vacancies remain high (25 per cent), there are pockets of shortage that have resulted in major occupiers seeking to have new space built for their requirements rather than occupy sub optimal space in existing buildings, the report added.
