JLL’s seven top tips for the UAE real estate market in 2015

JLL’s seven top tips for the UAE real estate market in 2015 are:

1 the Dubai residential bubble deflates

  • Dubai residential prices to decline marginally in 2015
  • Abu Dhabi to see stable sale prices but continued growth in rentals
  • There will be more emphasis on affordable housing in peripheral locations.

2 The UAE hospitality market faces increasing challenges

  • There will be continued downward pressure on revenues
  • Additional supply will increase competition
  • Spending by Russian and other European visitors will be lower
  • Operators will seek to create points of difference including in entertainment and food and beverage options
  • Abu Dhabi hotel market to remain relatively stable in 2015, poised for growth after 2017.

3 Commercial office market is maturing

  • Quality new supply will enter the Dubai market in late 2015
  • Pre-leases will increase
  • Rental growth will be limited
  • Changes to licensing regulations in Dubai are possible
  • Abu Dhabi to draft new regulations for the Abu Dhabi financial free zone

4 Sources of finance will be more varied

  • There will more IPO activity, but it is uncertain when
  • Asset sales will increase
  • The REIT sector will expand
  • Alternative asset classes will be developed.

Lower oil prices have increased nervousness among global investors. Debt levels are falling but remain high. Debt is still available from banks but at higher cost.

5 There will be significant but not excessive increases in supply

  • Few new megaprojects will be launched
  • Activity will focus on the completion of current projects
  • Retail and hospitality could see some oversupply beyond 2015
  • There will be extended timelines and phasing.

6 Regulations will become more sophisticated

  • There will be refinements to Dubai rental cap
  • There will be a new rental cap for Abu Dhabi
  • Transparency will increase.

7 Building cost inflation will increase.

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