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[DUBAI] Dubai's markets for residential real estate and hotel properties are peaking as lower oil prices dampen sentiment, though strong government spending and the emirate's diversified economy mean a sharp pull-back is not expected, consultants JLL said in a report on Sunday.
The residential market surged early last year on the back of a strong economy, with rents up 15 per cent and selling prices up 20 per cent in 2014 as a whole. But activity cooled considerably in the fourth quarter, JLL said. "Dubai's real estate sector ended the year on a quiet note as nearly all segments of the market witnessed subdued growth levels in Q4," it said. "Average prices and rentals in the residential sector appear to have stabilised over recent months, with some locations registering marginal declines." It noted that according to Dubai Land Department data, the number of residential transactions dropped 30 per cent last year and their value fell 14 per cent.
JLL predicted: "The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015," though it added that in reality, not all of those projects might be delivered on time.
The consultancy said that in the property cycle, Dubai's residential market was now passing from slowing rental growth to a phase of falling rents, while the hotel market was marginally behind that point in the cycle.
The retail sector is still in a period of slowing rental growth while the office market remains early in the phase of accelerating rental growth, it said.