Dubai Property Price Predictions
Engaging in Dubai property price predictions, much like anywhere else on the planet, is a risky business. The chances of your Dubai property price predictions being incorrect are as likely as they are to be correct. This has not, however, deterred Deloitte from releasing its second annual Real Estate Predictions Report for Dubai. The report seeks to provide an economic overview and review of Dubai’s residential, hospitality, office and retail markets in 2015. With the latest trends and developments in mind it also seeks to predict what may happen in 2016. Despite a very soft market in 2015, (see Dubai Property Prices 2015 here) the report is not all doom and gloom, suggesting that there may well be opportunity in the Dubai property market for 2016.
Robin Williamson of Deloitte Corporate Finance says of the report: “Over the past 13 years Dubai has experienced development on a scale and to a standard like no other real estate market globally. Along with other regional and international markets it has suffered the effects of the global financial crisis. Today, it is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors.”
Some of the key points in Deloitte’s Dubai property price predictions for 2016 are:
It sees 10,000 completed units being delivered, rather than the forecast estimates of 40,000 units for 2016.
Deloitte says that there was a 10% price reduction in Dubai residential prices in 2015, although this figure is quoted as much higher in other areas. It predicts that average residential prices will decrease further, reflecting Dubai’s transition to a more mature market
The report says there may be a softening in residential rental prices in some parts of the Dubai market, it does not see it being to the same degree as recent declines in residential sales prices.
Deloitte’s predicts that hotel occupancy levels at 70% to 75% are likely to represent a ‘new norm’ falling from figures of 77.5% in 2015. It also predicts that Average Daily Rates will reduce further, encouraging growth in visitor volumes.
The report says it feels that the Dubai serviced apartment market is likely to be an area of focus in 2016. It feels that this market will be driven by growing visitor demand for longer average lengths of stay and better value accommodation.
It also feels that the planned capacity increase at Dubai’s Airport to approximately 97 million passengers in 2016 may present opportunities to grow hospitality demand from passengers in transit as well as growth in destination visitors.
Deloitte feels that Dubai’s office market in 2016 will suffer slow growth due to recent supply gluts. It feels the power of negotiation is shifting from landlords to tenants. It also sees a trend towards more mixed use office led developments with a greater allocation of space to amenities.
There is currently a shortage of high quality office space in Dubai, Deloitte feels some companies may lease more space than they need with a view to subletting surplus space in the short term, with plans to grow into the larger space.
You can download the full Deloitte report from the company’s website and you can follow all the company’s predictions by using the hashtag #RealEstatePredictions on Twitter. If you wish to keep an eye on how the market has been progressing during the year then visit our Dubai Property Prices 2016 post.