Dubai growth to continue according to JLL report
Figures reveal GDP of Emirate to grow by 4.7% in 2014
The Dubai economy is expected to sustain its growth momentum according to Jones Lang LaSalle’s Dubai Real Estate Market Overview report, which covers the first quarter of 2014.
Figures from the Department of Economic Development reveal the GDP of Dubai will grow 4.7% in 2014, with the main drivers of the economy being tourism, trade, transportation and real estate.
The business outlook for Dubai continues to improve, with higher expectations of future business conditions, sales volumes and profits.
The Department of Economic Development's composite Business Confidence Index (BCI) stood at 144.3 points in Q4 2013, up 8% from Q4 2012, with more businesses willing to invest in expansion, recruitment and technology upgrades.
Activity in the real estate investment market remains strong. Dubai Land Department has revealed that the total value of real estate transactions in Dubai rose from AED154bn in 2012 to AED236bn in 2013. A major component of this increase was the return of significant land transactions. However, despite this increased activity, there remain few reported transactions of completed, income producing assets.
The office market sustained its recovery as overall occupancy rates and prices have increased in Q1 2014. With occupier demand continuing to be focused on good quality space, average rents in prime locations are expected to increase with 2014 seeing a broader based recovery with increased interest in secondary office locations given the declining choice in prime locations.
In terms of the residential market, it maintained its momentum with average prices increasing 33% Y-o-Y and average rents improving 23% Y-o-Y. The report said that, while the market remains shy of its 2008 peaks in most locations, prices in some areas have now reached peak levels. And they are expected to continue their upward trajectory over the remainder of 2014, albeit at a slower rate.
Rental growth was registered in both primary and secondary malls in the retail market and street shops also continue to witness popularity with a number of new project launches.
The hotel sector, meanwhile, maintained its strong performance supported by a growing number of tourist arrivals. Year-to-February saw occupancy rates reach 88% and Average Daily Rates rise to USD298. The hotel sector is expected to maintain it's positive performance and growth, as the government introduces new initiatives to attract further tourists and diversify the hospitality sector.
And in the industrial market the area to the south of Dubai continues to attract most attention, given improvements to the surrounding infrastructure, good connectivity, and proximity to the Expo 2020 site.
Craig Plumb, head of research at JLL MENA, said: "Dubai’s momentum from 2013 has carried through into the first quarter of 2014. The residential sector is leading the way with continued strong growth in both rentals and prices, while Dubai remains one of the world’s strongest performing hotel markets.
“Office rents have increased in prime locations in Q1, but the market remains extremely selective. Increased rents and reduced choice in the prime locations may lead to a more general recovery of the office market going forward.”