City in Focus: Dubai Highlights
Summer 2014

Dubai, one of the jewels in the crown of the United Arab Emirates, is a popular city with a booming property market. Since the real estate market crashed in 2008-2009, property prices have been on the rise and have rapidly turned Dubai into one of the hottest property markets in the world. However, the UAE government has learnt its lesson well and has taken action to ensure there is no repeat of the previous crash. According to Gulf Business, a recent JLL report says it is as a result of these actions and higher prices beginning to quell demand that we are finally beginning to see a cooling of the market.

Average property prices are still rising, with quarter two figures showing growth of 36% on the previous year; up from 33% in quarter one. However, the change can be seen when comparing one quarter to the next. Average prices rose 10% in the first quarter, but this fell to a 6% rise in the second quarter. The report also says the slowdown is mainly evident in the prices of existing villas, whereas the prices of apartments are still increasing. Although according to The National’s coverage of the JLL report villas are still worth around 23% more than the previous year, apartments have seen far more impressive growth and are now worth about 40% more. The report predicts the overall dip in average price rises will continue, particularly as the supply of new-builds is forecast to increase by around a tenth over the next two years, which should help further stabilise the market.

According to Gulf Business, the JLL report says in the rental market the picture is similar, with year-on-year rental rates increasing 24% in quarter two, compared to 23% in quarter one, but quarterly figures dropping from a 7% rise in the first quarter, to a 4% rise in the second. Again, rental rates for villas seem to be slowing faster than for apartments, with increases at 11% and 27% respectively. The report predicted rental rates would continue to see growth for a minimum of another six months.

According to the coverage of the JLL report by Emirates 24/7, the hotel and retail property markets are still experiencing rapid growth. The hotel occupancy rates in Dubai are much admired world-wide and stood at 85% in the 12 months to May 2014, even with room rates increasing by 3% and a substantial increase in the number of new rooms. The plans for the new Mall of the World also demonstrate faith in the retail and hotel sectors. The increase in retail stocks has so far been minimal and demand remains strong, causing rental rates to grow by 12% in the larger, more sought after malls during the second quarter. Increased retail spending by residents and the ever rising number of tourists appears to continue unabated, which bodes well for the sector.

Emirates 24/7 and Gulf Business say in the office sector of the market the opposite appears to be true, according to the report. Although rental rates have seen moderate increases, vacancy rates remain elevated while supply is also on the rise, which is putting downward pressure on rates. The recovery of the office sector has remained variable, but is really the only thorn in the side of Dubai’s property market.

• Gulf Business.com, Dubai’s Property Prices Grow 36% Y-O-Y In Q2 But Market Slowing, Says JLL, by Reuters, 20 July 2014;
• The National.ae, Brakes applied on Dubai house price growth, by Lucy Barnard, 21 July 2014;
• Emirates 247.com, Dubai property prices, rents rise, by WAM, 20 July 2014.