Expo 2020 set to spur economic expansion and real estate demand in Dubai
Source: Cluttons , Author: Posted by BI-ME staff
Posted: Sat September 9, 2017 1:03 pm

UAE. The Property Report - United Arab Emirates 2017 indicates that values across Dubai’s residential investment areas continued to moderate during Q2 2017, dipping by an average of 1.5%.

This leaves the annual rate of change at -5.8% and marks the 12th consecutive quarter of price declines, during which time prices have moderated by 14%. Apartments continue to fare better than villas, with prices decreasing by an average of 1% during Q2, compared to a 2.2% drop in villa values. 

Although prices have continued to fall, soft correction in the market appears to be nearing an end, with many locations starting to show signs of bottoming out, as previously reported by Cluttons. In fact, during the first six months of 2017, just seven of the 32 submarkets tracked in the emirate registered price falls, with all other locations seeing no change in values.

In the rental market, we expect continued moderation during 2017. The consultancy forecasts rents to end the year 5% to 7% lower than 2016, but like the sales market there is growing potential for a more stable picture to emerge, as the Expo effect starts to filter through. Villa rents are expected to end the year 10% down on 2016, while apartments are expected to demonstrate greater stability, with virtually no change in average rates when compared to 2016. 

Murray Strang, head of Cluttons Dubai, said: “Our view is that the rental market’s fortunes remain tied to the looming Expo 2020. At this stage, the mega event is one of the primary upside risks to our outlook, especially as we expect it to drive up the rate of job creation and tenant demand, but this is not expected for another one to two quarters at least.” 

As has been the case for more than 18 months now, Dubai’s office market continues to buck the trend being observed elsewhere in the property market, with rents remaining relatively resilient.

Faisal Durrani, head of research at Cluttons commented: “In general, we believe that rents will largely remain unchanged over the rest of 2017, with any declines likely to be contained at 5%. The looming VAT regime, however, which will see corporate occupiers liable for a 5% tax, based on their annual lease rates, may upset the stability the market has enjoyed recently, particularly in more secondary locations.

"Nonetheless, it is expected that many occupiers will have begun to price this into their plans for 2018, suggesting that the flat outlook may well persist for a year longer than it was originally anticipated before the Expo 2020 effect starts impacting demand and improving the rental growth profile of the city’s office market.” 

Speaking on the performance of more prime locations, Strang commented: “DIFC continues to be the stand out performer with rents remaining the priciest in the city. While it has already stamped its authority as the region’s foremost financial business hub, the planned addition of further Grade A stock, such as Emirates Towers Business Park, will intensify demand and help transition the financial centre from a regional hub to a global one.”

Editor's note: This is the second of a series of 4 articles about the UAE Property Market 2017 report.

Photo captions: (1) Main photo: The UAE Property Report 2017 - Dubai photo (photo credit: Cluttons)
                            (2) Inset photo: Murray Strang, head of Cluttons Dubai (File photo)

About Cluttons
Cluttons is a global real estate services company, with a presence in over 50 countries. Cluttons was one of the first surveying and property advisory businesses to open offices in the Middle East, and now offers dedicated real estate services across the Arabian Gulf, with offices in Abu Dhabi, Dubai, Sharjah, Bahrain and Oman.

Cluttons provides clients with residential sales and letting services, commercial leasing and investment, consultancy, property and facilities management, and valuations, fulfilling their property needs across the Middle East. Cluttons delivers its high-quality real estate services to clients ranging from international corporate and institutional investors, to private individuals and families.

With a strong presence in the Middle East since 1976, Cluttons is a trusted market leader in the region, having grown its operations and established a proven track record of success over the last 40 years.

Founded in 1765, Cluttons employs over 700 staff worldwide and has a fast-growing international presence, including a network of offices in the UK, Europe, Middle East, Asia Pacific, India and Africa.

For more information, please visit www.cluttons.com



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