Volatile global markets and geopolitical conditions may put Dubai property growth plans at risk

Some commercial property project planned for Dubai may be delayed or scaled back owing to volatile global markets and geopolitical conditions, according to a new report.

JLL’s Q3 2017 Dubai Real Estate Market Overview report said growth plans of corporates in the emirate face "some risk" despite another 35,000 sq.m of office space being added during the third quarter of 2017. It added that another trend noticed recently is the increase in sublease space in Dubai, with tenants seeking to sublease surplus space resulting from previous more ambitious expansion plans.

JLL said office rents have softened across Grade A quality buildings. It added that favorable renewal terms are being presented to retain tenants throughout the central business district, in the face of increased competition from the next generation of ‘best in class’ projects such as ICD Brookfield Place. The supply of residential units in Dubai continued to increase over the course of the third quarter, according to new data from JLL’s Q3 2017 Dubai Real Estate Market Overview report.

The data shows that there are over 487,000 units in the residential sector, with as many as 80,000 units expected by the end of 2019, with a number of developers, including Nakheel and Deyaar, announcing projects worth AED3.2 billion ($871 million) and AED1 billion ($272 million) respectively at Cityscape Global in September.

The research shows that a large portion of completions during Q3 were apartments, with 3,300 units delivered, compared to 660 villas and 75 townhouses. The largest completions were Duja Tower in Trade Centre First (679 units), Polo Residence in Meydan (595 units), District 1 (267 units) and Lila in Arabian Ranches (219 units). JLL data suggested that 80,000 units could be delivered by the end of 2019, although actual deliveries will likely fall below this figure.