In some of the most popular locations such as Dubai Marin and Palm Jumeirah rents have gone up by almost a quarter, according to the latest market report from consultants CBRE.
Dubai was one of the hardest hit real estate markets during the downturn, with CBRE reporting that average one, two and three bedroom apartments seeing rental rates slumping by 54% between the end of 2008 and the end of 2011.
But in 2012 confidence has started to return to the market. Locations seeing a 24 % rise in rents include Downtown Dubai, Dubai Marina, the Greens, Jumeirah Beach Residence and Palm Jumeirah.
‘Dubai is seeing higher rental growth this year due to a sustained period of population growth, positive economic performance, increased occupier demand, and limited availability of quality units in the most desirable locations,’ said Matthew Green, head of research and consultancy at CBRE Middle East.
The sales market has also improved. CBRE said that sales have increased by an average of 13% year on year with popular locations such as the Greens and Downtown Dubai seeing price rises of 20% year on year.
CBRE estimates around 36,000 new residential units are set to enter the Dubai market over the next three years, with the majority of these set to come on stream in Dubailand.
In the commercial office market, CBRE estimated 1.895 million square meters will come onto the market over the next two years, on top of the 7.15 million square meters of existing stock.
However, CBRE research found the office market was very location specific. Occupancy rates on Sheikh Zayed Road (CBD) average around 83% compared to a citywide average of 53%. By 2014, this is likely to average around 50%, CBRE said.
Around 60% of developments in the pipeline in Dubai are made up of multiple owners, known as Strata, which is a deterrent for large occupiers and has resulted in a scarcity of adequate units over 50,000 square feet, according to Nick Maclean, managing director of CBRE in the Middle East.
‘This means that a significant portion of the overall office inventory will always be unattractive to large occupiers, whilst some spaces in inferior location may never be occupied,’ the report concluded.
