Residential areas such as Palm Jumeirah, the Burj District and Dubai Marina have performed robustly, the Cluttons Dubai property market update for the second quarter of 2011 shows.
It also says that in the residential property sector high end villa rents are performing positively, demonstrating growth of 1.5% to 3% compared with the first quarter of the year.
Dubai residential rates have continued to fall, but the rate of decline has slowed significantly, with apartment rental values falling between 3.5% to 10% compared with the first quarter of 2011. The high end villa market has proved to be more resilient and has counteracted predictions that prices would soften over the past quarter; in some areas rents have increased by approximately 1.5 to 3%.
The emirate’s office market showing signs that it is stabilizing across the board, balancing out at AED40 per square foot in areas of high supply and Dubai’s commercial market has seen a surge in stock, but demand is focused at the top end of the market.
According to the report, there is hope that the market is nearing the bottom of the cycle, with rents dropping at a slower rate than in the first three months of the year. In selected areas the residential market has even demonstrated modest growth. The Arab Spring has been well publicized in the media to date, but Cluttons notes that demand from Bahrain and Egypt has not yet affected the market expecting the effects to become evident in the third and fourth quarters of the year.
The commercial market still faces the same downward pressure on rents seen throughout 2010, with rents in new business districts such as Tecom C, Business Bay, Jumeirah Lakes Towers (JLT) and Dubai Silicon Oasis hit hardest in terms of price reduction. Cluttons says that 2011 is expected to carry around 10 million square feet of office stock onto the market.
Whilst supply has increased hugely, there is still a shortage of good office stock and single owner buildings outside of Freezone areas, suitable for businesses that hold a standard Dubai trade license, the report adds.
The report says that time will tell whether price recoveries are an anomaly or a sign that the market has reached the bottom. In addition, Cluttons predicts that the summer months of the third quarter of the year will bring a resistance to any growth in all sectors.
