Rents to fall in Dubai? 25k new units likely
Dubai is likely to get 25,000 new housing units in 2015 with the residential property market remaining subdued, according to JLL.
“The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015,” the consultancy said in Q4 Dubai market overview.
However, it added that it remains cautious of the delivery of some of these projects within the time-frame.
The residential market stabilised in the second half of 2014 as average rents and sale prices remained relatively flat, with marginal declines over the last quarter.
The Reidin rental index, JLL said, showed growth levels falling from 18 per cent in 2013 to 15 per cent in 2014, while the sales index pointed to a decline from 23 per cent in 2013 to 20 per cent in 2014.
CBRE, a global real estate consultancy, said earlier it believes supply of 20,000 new units this year could have a “deflationary” impact on sales and rental rates.
Cluttons, another real estate consultancy, however, has said that tenant demand remains exceptionally strong despite the “cooling” of rents, which reflects that the “current period of rental stagnation is likely to be short lived” as economic expansion continues and expected rise in the level of job creation.
Last week, Dubai Land Department said real estate transactions had fallen by 7.6 per cent to Dh218 billion in 2014 from Dh236 billion in 2013.
JLL said demand for “affordable” housing is expected to increase over the next 12 months as Dubai’s economy continues to expand and job creation grows.
It states that a proposal to ensure the availability of affordable housing for the middle-income segment of the market is currently under review.
“These efforts aim to create a balance between the supply of luxury and affordable housing units that cater to all residents in the emirate, as many were previously priced out of the market during the 2013/2014 price rally,” the report states.
Emirates 24|7 reported earlier that Dubai developers were now focusing on launching “affordable” housing, targeting UAE residents in low- to mid-income level.
Read: Dubai developer targets UAE residents earning Dh9k-Dh15k per month
Follow Emirates 24|7 on Google News.