Despite headwinds, opportunities exist in Dubai’s real estate market in 2016

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Deloitte Corporate Finance Limited has published its second annual Real Estate Predictions Report for Dubai, which provides an economic overview and review of Dubai’s residential, hospitality, office and retail markets in 2015.  The report also examines the latest trends and developments and what lies ahead for 2016.  The report reveals that despite headwinds, Dubai’s real estate market offers some potentially good prospects in 2016.

“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,” explains Robin Williamson, managing director, Deloitte Corporate Finance Limited (regulated by the Dubai Financial Services Authority). “Today, it is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors.” 

Deloitte’s predictions on Dubai’s residential market performance for 2016:

  • 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
  • 2015 saw average residential sales prices across Dubai decline by approximately 10% and in 2016,  so it is predicted that average residential prices will decrease further, reflecting a transition to a more mature market
  • Whilst there may be a softening in residential rental prices in some submarkets, this softening won’t be to the same degree of recent declines in residential sales prices

Deloitte’s predictions on Dubai’s hospitality market performance for 2016: 

  • Occupancy levels at around 70% to 75% are likely to represent the “new norm” in Dubai’s hospitality market in 2016, compared to 77.5% in 2015
  • As operators compete for occupancy, it is expected that Average Daily Rates will soften further, which should encourage growth in visitor volumes required to support the investment in tourism infrastructure
  • Serviced apartments are likely to be an area of focus in 2016, driven by key source market trends, growing visitor demand for longer average lengths of stay and better value accommodation
  • Planned capacity increase at Dubai’s Airports to approximately 97 million in 2016 will present more opportunities to capitalize on hospitality demand from transit and destination visitor growth

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