JLL: Brexit unlikely to impact Dubai real estate
Data from Dubai Land Department suggests that British nationals are the third largest investors in real estate
As Brexit brings slight uncertainty into the market, the Q2 2016 rent values continue to face a downward slope in the office and residential sectors, according to a report by JLL.
According to the Dubai Real Estate Q2 2016 Overview report, Dubai caters to the most open real estate market within the region and as a result is more susceptible to external factors.
With diverse nationalities residing in Dubai currently, data from Dubai Land Department suggests that British nationals are the third largest investors in real estate.
Craig Plumb, head of research, JLL MENA, commented: “Even though it is too early to predict the long-term implications, overall there is a slight probability of British investors being negatively impacted by the devaluation of the British Pound following Britain’s decision to exit the European Union. However, we believe the effect of the decision will have temporary repercussions as a substantial number of British investors who work and reside in the UAE avoid sourcing their income in sterling.
"If we dissect the market further, particularly for residential, we notice that expatriates in Dubai are most likely to continue renting their homes instead of switching to ownership, resulting in sales being more negatively affected than the rental sector. If external factors stabilise over the rest of the year, we expect the Dubai residential market to easily recover in early 2017."
He added: "In Q2 2016, it has been interesting to see the office vacancy rates throughout Dubai showing a general downward trend. However, although this could be attributed to lack of quality office space, Dubai still remains the largest and most active office market in MENA as many businesses still prefer Dubai as the regional hub.
"Meanwhile, the Brexit decision has seen an adverse effect on the retail and hotel sector. Due to the devaluation of the pound, Dubai and the MENA region as a whole has become an increasingly expensive destination for European visitors.”
Around 1,500 villas were delivered in District 11 of the MBR City project in Q2 2016. This marks the first project which has been delivered in this major development.
A further 1,680 units were added across Dubai including both apartment and villa units, and taking the total stock to 462K units.
The second quarter of 2016 saw the handover of only one office tower; Westbury Square in Business Bay, which added 30,000 sqm of office Gross Leasable Area (GLA), taking the total stock to 850ha, broadly in line with the figure recorded during the first quarter of 2016.