The Dubai residential market is witnessing positive trends, especially with the supply side being regulated with the cancellation or putting on hold of a number of projects.
The positive market performance – especially led by tourism, retail and hospitality – has added to the customer confidence. With the performance of the property sector determined largely by the overall economic indicators, there are clear signs of growing demand for homes, as investment or for homeowner use.
High-end communities such as Downtown Dubai and Emirates Living have been witnessing the sales price being stabilized while new supply is entering developments such as Discovery Gardens, Jumeirah Lake Towers, Dubai Marina and International City.
Currently there are relatively stronger enquiries for villas than apartments – both for rentals and by investors. Downtown Dubai and Emirates Living have witnessed strong demand led by the luxury lifestyle choice and wide range of amenities these established communities offer.
With more supply poised to enter Discovery Gardens and International City, rental and sale prices have been witnessing downward trends. According to the Dubai Land Department the overall transactions have grown and more investors are entering the market with a long-term view mainly from Southeast Asia and the UK.
The Dubai Land Department is due to launch a property listing website which can be used by registered agents to list their properties. The department is scrutinizing a number of projects to understand their construction status to give a clearer indication of the supply side. Hamptons MENA is one of the exclusive registered agents invited by the Land Department to be involved in the launch stage.
The mortgage market is also witnessing more activity in the number of applications. Several mortgage providers are offering low interest rates and are increasing their mortgage portfolio.
Property agents are also convincing buyers to get pre¬approvals for their mortgages before entering an agreement to buy a property to make the process simpler and quicker as a number of buyers after agreeing to a price, tend to hold bad on their purchase plans due to non-availability of finance.
More recently, it has been reported that the Government is considering a new scheme for residence visas for investors, which will lend further impetus to the sector.
The Real Estate Regulatory Authority is trying to implement further initiatives to make the real estate market in Dubai more investor friendly which would create high demand from investors and end-users.
Dubai’s strategic location as a hub for businesses continues unabated, and with the unprecedented challenges faced by the region, there has been stronger interest in investing in Dubai. In fact, the UAE has recorded among the highest foreign direct inflows in the past months, according to reports, reiterating the potential for faster growth across all key sectors.
This has the potential to leave a positive impact on commercial property. Although currently the office market in Dubai is oversupplied with a number of new projects delivered or to be delivered in the short term, enquiries for office space tend to be increasing.
A number of companies are shifting from their old offices to new offices within the Central Business District such as at Deira and Sheikh Zayed Road or new freehold areas such as Business Bay, Dubai Silicon Oasis, TECOM and Jumeirah Lake Towers to take advantage oflower rents and additional facilities within the new buildings.
Rents within the CBD area have not declined as much as in the new areas including Jumeirah Lake Towers, Dubai Silicon Oasis and TECOM. Rentals in the new developments are affected by new supply entering the market.
Recently a developer offered a rent-to-buy scheme for office units in its commercial tower. Such initiatives earlier associated with the residential market, highlight the innovative marketing approaches by developers to promote commercial units.
Vacancy rates in Deira and Bur Dubai are said to be increasing as more companies seek to move to better locations and buildings due to the reduction in overall rents.
Landlords are offering attractive leasing options including rent-free periods as well as bearing DEW A and chiller charges for long-term leases. With more supply projected in the commercial market, such initiatives, which benefit the end user could become more popular.
DIFC recently offered a reduction in rents and in some cases abolition of registration fees for companies. According to Dubai Multi Commodities Centre Authority (DMCC), the licensing authority of Jumeirah Lake Towers, there has been growth in registration of companies in 2011 compared with 2010. Since the beginning of 2011, DMCC has registered more than 100 companies a month – most of them global organizations setting up headquarters or regional hubs.
With the Dubai economy poised to rebound, the demand for commercial property would boost too.