KPMG's top 5 trends for Dubai residential property

Business consultancy KPMG reviews the top five trends likely to impact Dubai's residential real estate market in 2016 and beyond

KPMG expects lower fluidity in 2016. [Representational image]
KPMG expects lower fluidity in 2016. [Representational image]
Oil prices have impacted office rents in Abu Dhabi. [Representational image]
Oil prices have impacted office rents in Abu Dhabi. [Representational image]
Certain segments are currently more attractive in Dubai. [Representational image]
Certain segments are currently more attractive in Dubai. [Representational image]
Danube Properties launched the Ritz project last year.
Danube Properties launched the Ritz project last year.
Dubai Expo 2020 is expected to spur investment in the Emirate.
Dubai Expo 2020 is expected to spur investment in the Emirate.

KPMG’s recently-released Building Confidence report predicts that Dubai's housing property market could witness an "upturn" in 2017.

The report is a review of Dubai's residential real estate sector, and stated the Emirate's housing market could face challenges in 2016 due to "a number of internal and external factors".

Read on to discover KPMG's expected top five trends for Dubai's residential real estate market this year.

Next page: What will guide Dubai's housing property market in 2016 and beyond?

KPMG: 'Liquidity is likely to become increasingly important as markets continue to tighten.'

Dubai developers have already been advised to maintain realistic plans and targets this year.

Hesham Al Qassim, chief executive officer of state-owned Wasl Asset Management, said in January that developers will have to rethink their budgets and construction plans repeatedly in 2016 as a response to fluctuating market conditions.

“Those who are mindful of the reality around them will manage, but those who stretch themselves with billions worth of projects won’t," Al Qassim said.

According to Arabian Business, he also remarked companies need to be more "agile" to sustain their businesses.

Next page: A question of oil

KPMG: 'A second important trend relates to the oil price, which seems unlikely to recover in the short term.'

The slowdown in oil prices has already impacted Abu Dhabi's commercial property market

As oil prices declined in the second half of 2015, Abu Dhabi's office segment reported a slowdown in the number of investor enquiries.

Knight Frank's Abu Dhabi Office Report for H2 2015 found grade A and prime supply remain "subdued", with completion targets of developments under construction being delayed.

Prime office rents amounted to $517.27 (AED1,900) per sqm, while rental values for Grade A Shell and core steadied at $354 (AED1,300) per sqm.

Next page: Quality versus quantity

KPMG: 'As supply and demand are not currently balanced, certain areas and segments are significantly more attractive than others – with a premium for quality.'

Development firms in Dubai, such as Al Sharq Investment (ASI), have previously stated their intention to maintain their distinction as a luxurious brand in the market

Mahmoud Amer, executive director at ASI, said: “Yes, 'The Alef' is a flexible brand, but it will always be a name that reflects the level of attention to detail and quality that we have established with our initial project [on Dubai’s Palm Jumeirah]."

Next page: Affordable housing on the rise

KPMG: 'There is also going to be a drive towards affordable housing, with increasing amounts of housing coming onto the market at prices that both compete with the rental market, and probably appeal to a much wider demographic.'

The chief of Dubai-based developer Danube Properties, which launched its budget-segment Ritz development in December, has previously announced 2015 as the "year of affordable housing".

Rizwan Sajan, chief of Danube Group and Danube Properties, told Construction Week he believes last year also witnessed the rise of better financing models.

"Without a doubt, 2015 was the year of affordable housing and convenient payment plans," he said.

Remarking on his foray into the real estate sector, he continued: "We started the properties division with clear focus on affordable housing segment.

"We identified the gap that existed in the market which was too focused on luxury and super-luxury segments while the mid-income population was left untouched."

Next page: The Expo effect

KPMG: Expo 2020 is likely to have both a direct and indirect impact on the real estate market – and is increasingly on the horizon for both the private and the public sector.'

The impact of the upcoming Dubai Expo 2020 is being viewed even outside the UAE as an advantage for regional real estate markets

In January, Oman Tourism Development Company (Omran) announced it is working to attract Expo 2020 visitors to its Mina Sultan Qaboos Waterfront project.

Omran's investor relations unit is already in advanced stages of negotiations with a number of private sector entities, state related entities, and investment funds.

The project has attracted interest from Omani and international private sector investors, developers, and the banking community.




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