Dubai: Residential rents in Dubai increased by 17 per cent on average over the past 12 months due to a growing population and a limited supply in the most popular locations, according to a new report by real estate consultancy CBRE.
“For tenants, this is a warning flag. We don’t want to see the market overheat as done previously,” said Matthew Green, CBRE’s head of research, at a media roundtable yesterday.
About 36,000 new apartments and villas may enter the market during 2013 to 2015 if construction delays are minimal, the report showed. Most of the upcoming residential supply is expected from secondary locations like Dubailand with 26 per cent of it in Motor City, Dubai Sports City, Liwan and Dubailand Residences.
“With supply levels becoming increasingly tight in popular community areas, further product launches are anticipated in 2013,” Green said.
Residential sales rates rose 13 per cent in the most established locations over the last 12 months with less than 20 per cent funded by mortgages and the rest in cash transactions, he said.
A total of 14,000 residential sales transactions were recorded in 2012, compared to 11,000 units the year before, he said, citing data from the Dubai Land Department.
“There is some concern about speculation in the market, not like 2008, but we keep an eye on it,” he said.
Retail and hospitality
The overall retail supply in Dubai will increase to 2.45 million square metres by the end of 2015 from 2.2 million square metres when about 230,000 square metres of new retail space will be completed in the next three years, the report showed.
Currently, Dubai has 57 per cent of the UAE’s total retail stock of 3.85 million square metres, it stated.
Prime rental rates for new leases are now around Dh4,500 per square metre. Mall rentals are slowly rising and the major malls have an occupancy rate above 90 per cent. Mall of Emirates and Deira City Centre are the best occupied malls at this time.
In the hospitality sector, about 14,000 hotel rooms in three to five-star categories will be complete in the next thee years if construction delays are minimal, the report showed. Five-star hotels will comprise 70 per cent of the pipeline until 2015.
In the office market, there is an overall vacancy of 47 per cent but that does not reflect demand for commercial district areas like Shaikh Zayed Road that has 17 per cent occupancy, the report stated.