Dubai, UAE: Sectors across the UAE’s property market continue to be tenant-friendly in the third quarter of 2020, according to JLL’s latest UAE Real Estate Market Performance report.
Dubai’s office market saw its first new stock additions of the year, with a total of 190,000 sqm of office gross leasable area (GLA) delivered in DIFC, Downtown Dubai and MBR City, bringing the total stock to 8.9 million sq m of GLA. Of all the completions in the commercial sector, ICD Brookfield Place in the DIFC is a notable one, as it is the first LEED Platinum commercial tower in the region. The incorporation of sustainability and health and wellness standards is expected to raise the bar for new market entrants and promote the responsible real estate agenda in Dubai and the region.
“With the ease of lockdown measures and increased mobility during the quarter, there has been a considerable increase in the level of new leasing enquiries in the office sector. Existing tenants also continue to either consolidate operations, seek more attractive lease terms, and, in some instances, look to relocate to quality space – a trend we are seeing across sectors in the country,” said Dana Salbak, Head of Research, JLL MENA.
The residential sector also recorded an increase in construction activity with around 12,000 and 600 units handed over in Dubai and Abu Dhabi, respectively. Looking ahead, JLL expects developers to continue offering a range of incentives such as fee waivers, discounts, rent-to-own, as well as partnerships with banks to attract new investors and end-users looking to take advantage of the lower prices.
The retail sector, across Dubai and Abu Dhabi, witnessed an increase in revenue share-based agreements, allowing retailers to minimize risk on capital expenditure. Although the reopening of malls has brought a gradual recovery in sales, compared to the last quarter, consumers continue to focus on essential goods rather than leisure items when it comes to spending. In order to sustain businesses within the fast-changing market, retailers have been engaging with landlords in restructuring deals and demanding additional rent free-periods.
According to the report, the hotel sector is witnessing ongoing demand from domestic tourists, with an increased appetite for beachfront hotels and private villas as residents look to capitalize on affordable luxury stays. Going forward, the lower market segment and business hotels are expected to take time to recover as the current priority is to manage cash flow and working capital.