Commercial Property: Predictions & Trends for 2016

Sunday, November 22, 2015

 

That there is a slowdown in Dubai’s real estate market is not a secret. So, how is the market in particular, Dubai commercial property expected to perform in 2016?

 

The softening of prices and price growth of commercial property in Dubai is expected to continue into 2016 given global macroeconomic concerns, such as, the Chinese economy, the appreciating dollar and Euro Zone issues. However, Dubai commercial property is expected to remain stable, showing steady growth and offering greater choice for tenants as the emirates continues to be a global and strategic hub for companies given its competitively priced investment choices and growth. At Better Homes, we think that the emirate is in a better position today to absorb economic setbacks than it was in 2008 when Dubai commercial property saw prices crash by more than 50 percent. Additionally, we should remember that this correction is coming in after three years of sharp price growthand should not becompared to the decline that we witnessed during the 2008-2009 global downturn. 

 

Based on our research, we expect to see growth return to the Dubai commercial property market during the course of 2016 after the tempering down we have seen this year. This, however, does not indicate a crisis or a bubble but a healthy softening. In fact, at Better Homes, we believe that this is what Dubai requires to provide renewed confidence to long-term investors and corporate establishments that the real estate market and particularly Dubai commercial property have matured. Hence, the drop in prices should be looked upon as a healthy and positive adjustment after the strong growth figures posted in 2014.

 

The low oil prices expected for 2016 might dampen the motivation of companies in related sectors to rent and increase their office space. Better Homes also thinks that a potential softening of sentiment in non-oil corporate segments in the coming couple of years, which could slow hiring, and thereby demand for new space, should be factored in.

 

What the market is going through is a much-needed easing to protect it from speculation and shed off the excessive price rise that we have seen over the past few years.Having said this, we do expect a return to growth as Dubai gears up for the mega Expo 2020 event. Our optimism at Better Homes also banks on bright prospects of the steady rise in Dubai’s population, its status as a top tourist, leisure and hospitality hub and its importance as the core regional business centre.

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