Monday, June 28, 2010

Jones Lang LaSalle: "Dubai Real Estate Slowdown to Continue"

You've probably seen reports quoting Jones Lang LaSalle's prediction that half of Dubai's commercial office space will be vacant in 2011 and that the residential property market will also be under stress until then as well.

Well, here's the original JLL report that is the basis for those news items.  Besides containing more information, the JLL report also provides some nuances.

Commercial Office Real Estate
  1. While there is a substantial vacancy rate in commercial office space currently at 38%,  only 12% of single ownership stock in the Central Business District ("CBD") is vacant.
  2. JLL sees very little demand for "strata titled" space.
  3. There is in some respects a shortage of good quality supply (location, specification, legal title) as evidenced by the lower vacancy rate in the CBD.
Residential Space
  1. Rents for  higher end apartments (Burj Khalifa) continue to decrease significantly.
  2. Higher end villas are hit even harder.
Retail Market Space
  1. Estimated Rental Values down 39% from 2Q09 to 2Q10.
  2. Retail sales growth expected to come from department stores and mid market value chains rather than luxury goods.
  3. No significant new supply until 2013 (Mall of Arabia in Dubailand).
Hotels
  1. Beach hotels have higher Average Daily Rates than business hotels - AED1,386 versus AED660.
  2. New hotels are expected to intensify competition and lead to a decline in ADRs not a decline in occupancy percentages.
There's a lot more in the report and you can "mine" it according to your own interests.

3 comments:

the real nick said...

You forgot to tag this post 'consultants'. CBRE, JLL et al. tell you what you already know, but with nice pie charts.

Abu 'Arqala said...

TRN

On many topics I know very little - that's why so much is "news" to me.

Best

the real nick said...

AA,
You are right of course. These reports are useful for those who are not in Dubai. It's just that this research is paid for by the clients of these consultants. And they rarely come up with unexpected new insights.