The Dubai Real Estate Market Overview – Q2 2013’ was released today by real estate investment and advisory firm Lang LaSalle. The research covers Dubai office, residential, retail and hospitality market segments.
Market Highlights Q2-2013:
· The Dubai economy continues to expand and the Gross Domestic Product recorded a 4.4% growth in 2012 as per the Dubai Statistics Centre. The expansion was mainly supported by the strong performance of sectors such as hospitality (17% growth in 2012), manufacturing (13%) as well as transport, storage and communication (7%).
· The business outlook of Dubai continues to be strong with the Department of Economic Development’s Business Confidence Index (BCI), standing at 113 points during the first quarter of 2013. Confidence is still rising and businesses continue to be upbeat as the survey showed 91% of firms reporting either improvement or stability in business conditions.
· The real estate investment market remains active with increased volumes of commercial and residential transactions as investment sentiment in Dubai continues to improve. We continue to notice interest in single-owned well let buildings from investors from the GCC, who are attracted by the “safe haven” status of Dubai, its legal system and the overall recovery in the market. There are also increasing investments from Chinese organizations in the Dubai real estate market.
· The office market continues in its recovery path with rental growth recorded mainly in the prime locations and new high quality buildings. The “flight to quality” remains a main trend in the market, especially as the new areas like Business Bay and JLT have been improving.
· The residential market is now experiencing a broad-based recovery, with prices and rental values picking up in the secondary and more affordable locations, while the primary areas are now witnessing slower paces of growth. Projects in newly developed areas are still lagging behind and will need more time before picking up.
· The retail market continues to improve and remains dominated by the best performing super-regional malls (eg: Dubai Mall, Mall of the Emirates). As retail space is becoming more difficult to find in those large centres, the near future may see an increase in demand for retail space in secondary malls.
· The hotel sector maintained its strong performance, supported by a growing number of tourist arrivals in Dubai. Year-to-date (YTD) occupancy rates have reached 85% while YTD Average Daily Rates (ADRs) are at USD 267. This hotel sector is expected to continue to perform well throughout 2013 and beyond.
· The industrial market continues to perform well overall. Demand has started to shift to the newer areas in the south of Dubai, which are witnessing strong growth and are benefiting from well developed infrastructure, good connectivity, proximity to major infrastructure projects, in addition to better quality products.