Dubai Property Market Finally Shows Signs of Stabilising
19 July 2011
Both the residential and commercial property market in Dubai is finally showing signs of stabilising, with higher end property performing the best. According to the Cluttons Dubai property market update for the second quarter of this year, the residential areas of the Burj District, Dubai Marina and Palm Jumereirah have performed the most strongly.
The report also found that rents for high-end villas had increased by 1.5% to 3% compared to the first quarter of 2011. In general rental values for apartments in Dubai have declined by 3.5% to 10%, but the luxury villa market is proving far more resilient.
The office market is showing signs of becoming more stable, with prices averaging AED40 per square foot as supplies are still high. However much of the demand is focused on top-quality offices.
There is increasing hope that the market may have finally bottomed out as rents are falling at a much slower rate than the first quarter of the year, and in some areas the residential market is even showing signs of growth. Expected demand from Bahrain and Egypt has not yet become apparent, but some analysts think this demand will become evident during the second half of 2011.
Commercial property is still expected to see downward pressure on rents, with the areas most affected being Business Bay, Jumeirah Blake Towers and Dubai Silicon Oasis as there is still a huge supply. The Cluttons report feels it is too early to tell if the market has reached rock bottom, and it doesn't forecast any substantial growth in the near future.