Dubai’s residential property market has now bottomed out with no change in rents or prices in the apartment segment during Q3, according to JLL.
In its quarterly report the firm said steady values reduced the rate of decline in the market on an annual basis, with rents and sales prices down 4 per cent and 2 per cent year-on-year respectively.
Villa rentals and sales declined 1 per cent quarter-on-quarter and were down 6 per cent and 2 per cent each year-on-year.
“With only minimal change reported in prices and rents during Q3, it appears the residential market has now reached the bottom of its current cycle. While we expect prices and rents to recover in 2017, the pace of this recovery is expected to be limited by economic uncertainties and the volume of potential supply,” JLL said.
In contrast, rival consultancy Cluttons predicted further declines for property prices and rents across Abu Dhabi, Dubai and Sharjah last month.
In the wider report, JLL said 5,400 residential units were completed during Q3, the highest quarterly completion since Q4 2012 when 6,200 units entered the market.
Of these 63 per cent were residential units, including 680 at Wasl Oasis II and 400 villas in Rahat Villas.
A further 11,000 units are scheduled to enter the market in Q4 “although not all these projects are likely to be delivered”, the firm said.
New additions include 2,500 townhouse and apartment units in Damac’s Akoya project.
In retail, JLL said 28,000 square metres were added during the quarter with the majority (25,000 square metres) coming through the opening of the Outlet Village.
Average rents in primary locations remained unchanged both year-on-year and quarter-on-quarter, which the firm said indicated market saturation and a lack of competition for units.
“Given the overall slowdown in the regional economy that drives retail demand in Dubai, this is not a surprise,” the firm said.
A further 20,00 square metres across projects in Al Furdan, Al Badrah and International Media Production Zone is expected in Q4.
Meanwhile, in hospitality JLL said 5,500 rooms had entered the market since the start of the year including the 1,000-room Westin Al Habtoor and 830-room Atana Hotel in Tecom in Q3.
This brought the emirate’s room total to 78,000.
However, the market remained under pressure due to low oil prices and the strong US dollar.
Occupancy remained almost stable at 76 per cent but average daily rates were down 11 per cent to $191.
JLL said a further 1,300 rooms were expected to be added in Q4.
“While a further decline in room rates and yields can be expected over the short term, the medium term outlook for the market remains positive due to the heavy government investment in expanding the cities tourism infrastructure,” according to the firm.