Dubai: Driven by tighter government regulations and an increasing mismatch between consumer and seller expectations, Dubai's real estate market is now experiencing a period of stability, according to a report.
"The Dubai real estate market saw a welcome levelling-off during the summer months. The broad based recovery witnessed in the residential sector over the past 18 months has now slowed down, as rental prices and sale values have stabilised in most locations," Head of Research at JLL MENA Craig Plumb said in the report released by real estate investment and advisory firm JLL.
While new projects continue to be announced, these have no immediate impact on supply as they are phased over a longer timeframe, Plumb said.
"Although the hotel sector underperformed over the month of July, registering 50 per cent occupancy rates, it is expected to trend upwards into the peak season in the last quarter of the year. Elsewhere in the market, the retail segment maintained its solid growth while the recovery of the office sector remains patchy, as high levels of supply continue to constrain the market," he said.
The Dubai Real Estate Market Overview report released by leading real estate investment and advisory firm JLL provides the consultancy's perspective on the latest trends in the office, residential, retail and hotel sectors in the emirate.
Driven by tighter government regulations and an increasing mismatch between buyer and seller expectations, the residential sector is now experiencing a welcomed period of stability, the report said.
The third quarter of 2014 continued to see a two-tier office market, says the report. While prime CBD rents have remained stable over the quarter, they are expected to increase as demand remains strong for Grade A office space.
Meanwhile, rents in secondary locations are expected to remain under downward pressure as more Grade A office space enters the market by 2015.
On the demand side, corporates are becoming increasingly aware of the importance of sustainability and there is heightened interest for LEED certified buildings.
The report showed, while property values in Dubai have increased over the past year, the third quarter saw more subdued growth levels in both apartment and villa sale prices and rents.
Average rents and sale prices grew by just 2 per cent and 1 per cent respectively in Q3, down from 3 per cent and 6 per cent in Q2.