Dubai: «The Gulf»
JLL issued its latest report titled “The Real Estate Market in the UAE for the Second Quarter of 2022”, in which it indicated that the hotel sector in the UAE has benefited from the influx of visitors coming from a variety of source markets for tourists, and that the sector witnessed A noticeable increase in occupancy rates during the past five months; Dubai and Abu Dhabi recorded occupancy rates of 75% and 71%, respectively, which is a significant increase compared to the same period last year. The report also indicated that the rise in the performance of this sector was driven by luxury resorts and seaside destinations, which remained the preferred choice for the guest more than other categories.
It should be noted that Dubai witnessed the completion of regarding 500 rooms in the second quarter of 2022, bringing the total hotel stock in the city to 144,000 rooms. An additional 10,000 rooms are scheduled to be delivered in the second half of the year. Although no new rooms entered the inventory in Abu Dhabi during the second quarter, regarding 700 rooms are expected to be delivered by the end of 2022.
In this regard, Amr El-Nadi, Head of Hotels and Hospitality in the Middle East and Africa and Executive Vice President, Global Hotels Office at JLL, said: “We are witnessing an improvement in the morale and positive outlook for the sector, but hotel operators will have to provide competitive offers and develop Their products are far from the traditional models so that they can take a good position among the competitors in view of the increasing maturity of the market. This has become of great importance, especially in light of managing the general impact of inflation and the growing strength of the UAE dirham on the purchasing power of tourists. The main solution to this will be to adopt a balanced approach to achieving the targeted revenue.”
“The current economic situation can pose major challenges,” he added. However, in light of the high rates of domestic demand, the recovery in the tourism sector at the present time, and the many policy changes adopted by the government with an emphasis on transparency, we are optimistic that the United Arab Emirates has strong potentials that enable it to continue its transformation towards an upward path.”
Retail outlets
With regard to the retail outlets sector, the sector did not witness the completion of any new projects, which led to the stability of the stock in Dubai and Abu Dhabi without change. However, it is expected that regarding 333,000 square meters of retail outlets will be completed in Dubai, and 203,000 square meters will be completed in Abu Dhabi during the second half of 2022. Despite the foregoing, developers have expressed some concern regarding the delivery of retail outlet projects planned for the first two to eight years. The next ten months, which may lead to fluctuations in the balance of supply and demand. In order to mitigate the consequences of this, it is possible to postpone the completion of projects until the economic conditions recover, allowing the absorption of the areas expected to be added by future development projects to the market.
In contrast to Abu Dhabi, which witnessed stability in the rental prices of retail outlets, the rental prices of retail outlets in Dubai continued to decline in the second quarter, which decreased by regarding 3% on average, compared to last year. Thanks to strong domestic demand for leisure destinations and a boom in the tourism sector, F&B outlets outperformed the rest of the retail segments, while the fashion and luxury segment continued to recover.
Housing units
With regard to the housing units sector, the market in Dubai witnessed the entry of regarding 6,500 new units in the second quarter of this year, while Abu Dhabi witnessed the completion of regarding 1,300 new housing units. Demand for premium residential properties remained strong in Dubai, especially in the waterfront developments. Evidence indicates the continued influx of large numbers of investors from Eastern Europe, and the continued appetite of buyers from China, India, Pakistan and Central and Western Europe for these properties. In line with the increasing levels of activity, the prices of residential units in Dubai began to increase, recording an increase of 11% in May compared to the previous year, and rents increased by a double-digit rate of 19% during the same period.
In Abu Dhabi, strong demand for new villa and townhouse projects continued, and annual sales prices for apartments and villas increased by 5%, while rents increased by 3%.
office space
In the office space market, the strong demand for first-class offices, coupled with the limited availability of this category of space, has led to an increase in rents by more than 10% in Dubai, compared to 8% in the capital, Abu Dhabi, to reach AED 1,700 per square meter annually.
Although no new projects were delivered in the office space sector during the second quarter of the year, the good levels of leasing activity helped reduce the availability of vacant units in business districts, which reached 14% in the second quarter of this year. This can be attributed to the increased demand from tenants for quality as they tend to rent space in well-managed and Sole Proprietorship office space buildings. This trend has led to office building owners regaining their bargaining power, which in turn has led to a decrease in the levels of flexibility and incentives offered in negotiations.
This quarter also saw a significant rise in inquiries from new companies in the market, especially on flexible office space coupled with demand from existing tenants looking to expand their premises. In terms of absorption rates, the financial services, technology and e-commerce sectors continued to maintain their leadership.
