Dubai residential prices could ease in 2010 on demand-supply balance
By Suzanne Fenton, Staff Reporter
Published: July 17, 2008, 00:05
Gulf News
Dubai: House prices in Dubai are set to moderate in 2010, as supply and demand begin to strike a balance, according to industry analysts.
Robert McKinnon, managing director of Al Mal Capital Research, said: "Into next year we expect prices to begin to moderate, though not substantially."
There has been a flurry of predictions in recent days over Dubai's supply and demand situation in 2010, especially with the massive bulk of units set to hit the market coupled with the Dh6 billion in escrow accounts.
"As delays continue to plague the industry, we do not expect supply and demand to come into balance until 2010," Robert McKinnon, managing director at Al Mal Capital Research, told Gulf News.
The report says, according to the Dubai real estate price index there has been a year-on-year price appreciation of 40.8 per cent in the residential segment.
Prices in the commercial segment have increased around 42.7 per cent within the same period.
Average rates
Figures from Al Mal show the average rent in Dubai in June 2007 was Dh1,291 per square foot. Average rent in June 2008 was Dh1,818, representing a year-on-year increase of 40.8 per cent.
Blair Hagkull, managing director of Jones Lang LaSalle, Middle East and North Africa region, said better quality housing in central locations that are well maintained and have good infrastructure will always demand higher rents in the future.
"Clearly, the rate of increase in the last five years, in terms of residential prices, is not sustainable. Rates have increased to a point where the price is a concern," Hagkull said.
Locations such as Barsha and Jumeirah Lake Towers, good quality accommodation with good links to public transport, will see the greatest rises in prices.
"At some stage, the Dubai Metro will play an important role in what people will pay. If you live close to a station, then that accommodation will be more expensive," Hagkull said.
For commercial properties, Al Mal said the average rent in June 2007 was Dh1,444 per square foot while the average rent in June 2008 was Dh2,060. This represents an increase of around 42.7 per cent. However, Matthew Hammond, managing director of Jones Lang LaSalle, said: "We anticipate rents [in commercial properties] will continue to increase over the next 12 months, if not 24 months, until more stock comes on to the market."
Hammond said with the rising costs of materials, many developers have been forced to slow down development plans, thereby causing delays in the market.
"Properties that were due to come on in 2009-2010, have now been pushed back to 2011-2012," he said.
Hammond said the average rent for office space in DIFC is around Dh500 per square foot but new buildings will be around Dh600 per square foot, plus management fee.
Dubai residential prices could ease in 2010 on demand-supply balance
By Suzanne Fenton, Staff Reporter
Published: July 17, 2008, 00:05
Gulf News
Dubai: House prices in Dubai are set to moderate in 2010, as supply and demand begin to strike a balance, according to industry analysts.
Robert McKinnon, managing director of Al Mal Capital Research, said: "Into next year we expect prices to begin to moderate, though not substantially."
There has been a flurry of predictions in recent days over Dubai's supply and demand situation in 2010, especially with the massive bulk of units set to hit the market coupled with the Dh6 billion in escrow accounts.
"As delays continue to plague the industry, we do not expect supply and demand to come into balance until 2010," Robert McKinnon, managing director at Al Mal Capital Research, told Gulf News.
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The report says, according to the Dubai real estate price index there has been a year-on-year price appreciation of 40.8 per cent in the residential segment.
Prices in the commercial segment have increased around 42.7 per cent within the same period.
Average rates
Figures from Al Mal show the average rent in Dubai in June 2007 was Dh1,291 per square foot. Average rent in June 2008 was Dh1,818, representing a year-on-year increase of 40.8 per cent.
Blair Hagkull, managing director of Jones Lang LaSalle, Middle East and North Africa region, said better quality housing in central locations that are well maintained and have good infrastructure will always demand higher rents in the future.
"Clearly, the rate of increase in the last five years, in terms of residential prices, is not sustainable. Rates have increased to a point where the price is a concern," Hagkull said.
Locations such as Barsha and Jumeirah Lake Towers, good quality accommodation with good links to public transport, will see the greatest rises in prices.
"At some stage, the Dubai Metro will play an important role in what people will pay. If you live close to a station, then that accommodation will be more expensive," Hagkull said.
For commercial properties, Al Mal said the average rent in June 2007 was Dh1,444 per square foot while the average rent in June 2008 was Dh2,060. This represents an increase of around 42.7 per cent. However, Matthew Hammond, managing director of Jones Lang LaSalle, said: "We anticipate rents [in commercial properties] will continue to increase over the next 12 months, if not 24 months, until more stock comes on to the market."
Hammond said with the rising costs of materials, many developers have been forced to slow down development plans, thereby causing delays in the market.
"Properties that were due to come on in 2009-2010, have now been pushed back to 2011-2012," he said.
Hammond said the average rent for office space in DIFC is around Dh500 per square foot but new buildings will be around Dh600 per square foot, plus management fee.