CBRE: Residential rents decline further in Q4 2016
The residential sector is expected to see more stable sales pricing during 2017 as sentiment slowly starts to improve
Dubai’s residential sector experienced modest drops in rentals during the fourth quarter of 2016.
A 1% dip in average leasing rates were recorded according to the Dubai Annual Market Update Report by global real estate advisor, CBRE.
Mat Green, head of research and consultancy UAE, CBRE Middle East said, “With an expanding pipeline of new units, current deflation trends are likely to continue throughout 2017, with many new homes set to complete.
However, there are signs that the transactional market is once again stabilising with no major change in average sales rates noted during the past two quarters, although on a year-on-year basis, residential values have still fallen by an average of 5%.”
During 2016, average apartment sales rates fell by around 4.6%, whilst the drop for villas was more pronounced at 6.5%.
The residential sector is expected to see more stable sales pricing during 2017 as sentiment slowly starts to improve. However, there is a cautionary note with the recovery amidst rapidly rising supply levels, the report said.
Approximately 70,000 units are expected to be delivered between 2017 and 2019 as developers make a major push in the build up to Expo 2020.
Commenting on the commercial office market for 2016, Green, said, “The commercial office sector has evolved into a clear two-tiered market, with prime accommodation, particularly in the free zones, attracting strong demand amidst low levels of supply availability, sustaining rentals for well-located Grade-A office accommodation.
“However, the secondary market continues to weaken, with a 12% annualised decline in rental values brought about by a persistent oversupply of strata office product and a general softening of demand fundamentals.”
With large, efficient office spaces over contiguous floors in short supply, pre-leasing activity remains buoyant, underlining the polarised market environment that has emerged, the reported said.
With a robust economy underpinning the sector, the total office stock during 2016 stood rose to 9.1 million m², as compared to just 3.0 million m² in 2007.
Future supply of 0.9 million m² is expected to be delivered between 2017 and 2019.