“The hotel market continued to witness a slowdown in performance, partly attributable to a decrease in the number of tourists from Russia, South Asia, Far East Asia and Africa visiting Dubai. Despite this, occupancy rates are still high when compared to other international markets, but we expect this to soften with the delivery of an additional 450 rooms at the Intercontinental in Dubai Marina, Ibis Styles in Jumeirah and Hyatt Place in Deira. We are also seeing efforts to diversify Dubai’s tourist base away from leisure and entertainment with the potential to establish Dubai as a leading medical tourism hub. Initiatives such as this will help to ensure a constant stream of visitors.”
He continued: “The commercial sector has been largely stable with demand focussed on the higher quality offices of the Central Business Districts, most notably the DIFC, which continues to see increased demand and thus higher rents. Conversely, lower occupancy rates have resulted in a marginal softening in rents in secondary locations. One notable trend is tenants are now migrating between free zones as licensing requirements are relaxed. The limited supply of new office space in TECOM has resulted in many tenants moving to the nearby JLT free zone. ”
He concluded: “The retail market remained subdued over the third quarter as annual rental growth rates across all mall types continued to slow down. There are signs that landlords have recognised this softening and have adjusted rental levels to more realistic levels in order to differentiate their offerings in the face of strong competition. We expect rents to drop over the 12 months as the market moves through its cyclical peak.