Dubai was one of the hardest hit real estate markets during the downturn, with CBRE reporting that average one, two and three bedroom apartments seeing rental rates slumping by 54 percent between 4Q2008 and 4Q2011.
Over the last 12 months, this slide has begun to rebound, with average prices increasing by 17 percent, with popular locations in Downtown Dubai, Dubai Marina, the Greens, Jumeirah Beach Residence and Palm Jumeirah increasing by around 24 percent year-on-year.
“Dubai is seeing higher rental growth this year due to a sustained period of population growth, positive economic performance, increased occupier demand, and limited availability of quality units in the most desirable locations,” said Matthew Green, head of research and consultancy at CBRE Middle East.
This positive growth was also seen in the amount paid by new buyers, Green added. With around 14,000 sales registered by the Dubai Land Department in 2012, he said prices rose by an average of 13 percent, with the Greens and Downtown Dubai performing even stronger and surging ahead 20 percent year-on-year.
Figures showed that 80 percent of buyers were still cash buyers, CBRE said.
Going forward, CBRE estimates around 36,000 new residential units are set to enter the Dubai market over the next three years, with the majority of these set to come on stream in Dubailand.
In the commercial office market, CBRE estimated 1.895m sqm will come onto the market over the next two years, on top of the 7.15m sqm of existing stock.
However, CBRE research found the office market was very location-specific.
Occupancy rates on Sheikh Zayed Road (CBD) average around 83 percent, compared to a citywide average of 53 percent. By 2014, this is likely to average around 50 percent, CBRE said.
Around 60 percent of developments in the pipeline in Dubai are made up of multiple owners, known as Strata, which is a deterrent for large occupiers and has resulted in a scarcity of adequate units over 50,000 sqft, added Nick Maclean, managing director of CBRE in the Middle East
“This means that a significant portion of the overall office inventory will always be unattractive to large occupiers, whilst some spaces in inferior location may never be occupied,” the report concluded.