A global real estate consultancy has lowered its three year forecast for future office supply in Dubai by 30 per cent, Emirates 24/7 can reveal.
“Beginning of this year, we were expecting 2.6 million square metres to be delivered between 2011 and 2013. With many developers experiencing cash flow problems and the failure of master developers to provide infrastructure in many areas, we have decreased our estimate of future office supply to around 1.8 million square metres,” Craig Plumb, head of research, Jones Lang LaSalle (JLL) told Emirates 24/7.
Total office stock was about 5.6 million square metres at the end of second quarter. Around 600,000 sqm of office space was expected to be completed over the second half of the year, bringing total stock to around 6.2 million sqm.
Prime office rents remained largely unchanged with CBD rents hovering at Dh1,615 per sqm. However, rents for secondary space (based on quality or location) continued to decline. Capital values fell 16 per cent y-o-y, while q-o-q decline was of one per cent.
City-wide vacancy rates remained stable at 44 per cent, but may surpass 50 per cent over the next year subsequent to new supply handovers. CBD single ownership stock vacancy rates remained unchanged at around 27 per cent.
Apartment prices fall
The average asking prices for apartments fell five per cent to Dh9,988 per sq m, after remaining relatively stable over the last three quarters. Average achieved prices decreased one per cent to around Dh8,234 per sqm.
In the case of villas, average achieved price increased by three per cent to Dh9,257 per sqm, while asking prices too rose marginally. Rise in villa prices were primarily driven by higher-end villas in established communities such as Palm Jumeirah and Arabian Ranches.
Rents in the established areas such as Downtown Dubai and Palm Jumeirah stabilised with some landlords even attempting to increase asking rents. In other locations, apartment rents are still declining.
“Landlords are trying to disguise rental declines by offering rent free periods (13 or 14 months for the price of 12) and free air conditioning, rather than dropping asking rentals,” the report said.
According to JLL, approximately 2,000 units were completed in various projects across Dubai, bringing the total current residential stock to around 322,000 units.
The largest completions were Mayfair Residency in Business Bay and Silverene Towers (1 and 2) in the Marina. A further 18,000 units are expected to be completed by year-end, bringing the total residential stock to approximately 343,000.
Emirates 24/7 reported earlier that Dubai is not likely to get more than 10000 new units (residential and commercial) during the year.