The residential, office and retail sectors across the UAE real estate market will remain friendly to tenants against the backdrop of a wide range of incentives provided by landlords as the addition of new units is expected to further reduce prices and rental rates in the short term.
Developers are expected to continue offering a host of incentives such as fee waivers and discounts.
Developers are expected to continue offering an array of incentives such as fee waivers, discounts, and rent-to-own, as well as partnerships with banks to attract new investors and end-users looking to take advantage of the lower prices, according to JLL's latest UAE real estate market performance.
"Looking to the future, the housing market is expected to remain under pressure in the short term in light of many overall uncertainties, such as high unemployment rates and slowing population growth.
This is in addition to weak investor sentiment at the global level," he said.
“With ease of closing procedures and increased mobility during the quarter, there was a significant increase in the level of new leasing inquiries in the office sector. Existing tenants either continue to standardize operations and seek more attractive lease terms.
The Dubai office market witnessed the first new inventory additions this year, with a total of 190,000 square meters of GLA office space (total leasable area) delivered in the DIFC, Downtown Dubai and MBR City, bringing the total inventory to 8.9 million. Square meters of GLA.
In Abu Dhabi, no additional stock was delivered, bringing the total supply at 3.8 million sq.m. to GLA. An additional 36,000 square meters and 47,000 square meters of GLA are slated for delivery during the fourth quarter in Dubai and Abu Dhabi respectively, including office buildings in Dubai Production City and a first-class building in Abu Dhabi.
“Ease of closing procedures and increased mobility during the quarter significantly increased the level of new rental inquiries in Dubai. Meanwhile, existing tenants continue to either consolidate operations and seek more attractive lease terms, and in some cases are looking to move into a quality space,” said J. LL in its report.
Taimur Khan, Associate Partner - Strategic Consulting and Research at Knight Frank, said space standardization and aviation trends toward quality are likely to continue.
“Occupiers, wherever possible, are looking to take advantage of weaker market conditions to upgrade the occupational space while taking into account increased overall spending. Finally, owners are expected to remain flexible in order to retain and attract occupiers. Incentives to achieve this include but are not limited to flexible payment terms and capital expenditure contributions. And free rental periods. "
In Dubai, rental rates hit an all-time low in the third quarter of 2020, with a 12 percent decline year-on-year, surpassing the 2010/11 lowest point on the rental index. In addition, sales prices continued to decline, dropping 9.0 percent year-on-year, according to a JLL report.
The residential market in Abu Dhabi also recorded some decline, albeit to a slower degree than the Dubai market. Rental rates decreased by 3.0% and 4.0% for apartments and villas respectively year on year. Likewise, sales prices recorded a decrease of 5.0 percent and 1.0 percent for apartments and villas respectively during the same period.