Core UAE on Dubai real estate’s winners and losers

Prime residential, commercial, and industrial locations were among Dubai’s H1 2016 real estate winners, according to Core, UAE associate of Savills

Prices in Dubai’s Jumeirah area increased by an average of $1,900 from Q1 2015 to Q1 2016.
Prices in Dubai’s Jumeirah area increased by an average of $1,900 from Q1 2015 to Q1 2016.

Established prime residential, office, and warehousing locations were among Dubai’s H1 2016 real estate winners, according to Core, UAE associate of Savills.

The property specialist’s Dubai Investment Outlook H1 2016 also found that mid-segment hotels and serviced apartments, and international curriculum schools, proved positive investment choices during the first six months of the year.

Grade B secondary location offices, affordable residential developments, and four- and five-star hotels, meanwhile, performed less favourably, according to the report.

Commenting on the findings, David Godchaux, chief executive officer of Core UAE, said: “Different investors have different risk appetites. We have not compared the returns or risks of different investment sectors, but have evaluated and compared risk rewards and tried to analyse what may be the opportunities – or potential segments – to look for over the next five years.”

The report revealed the relative resilience of prices in most of the established, ‘ultra-prime’ areas. Prices in Dubai’s Jumeirah area increased by an average of $1,900 (AED7,000) from Q1 2015 to Q1 2016. Emirates Hills, meanwhile, was down just $1,100 (AED4,000), while Palm Jumeirah prices fell by $1,630 (AED6,000).

These figures are in stark contrast to a price drops of $6,800 (AED25,000) in Jumeirah Islands, $5,450 (AED20,000) in Jumeirah Village, and $4,350 (AED16,000) in Sports City.

“The realisation that the market is ‘bottoming’ seems to have stimulated interest from investors and end users, who have been waiting for several years for ‘deals’, prompting renewed enquiries for better, value-for-money products – especially in the prime residential segment.

“Coupled with the limited available new supply in the few established ultra-prime residential areas, our outlook continues to be steady in the mid-term until 2020,” he added.

Godchaux’s team found that socioeconomic and geopolitical deterrents, along with a consolidating job market across the Middle East, are currently causing a decline in tenant demand in Dubai’s office market.

In terms of available warehouses in Dubai, location-related advantages, improving business rankings, and quality public infrastructure have created strong demand for prime logistics spaces, the researchers continued. However, they noted a significant lack of grade-A supply for occupiers to lease.

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