Dubai's real estate market will see another 18,000 homes by the end of the year, adding to the emirate's oversupply woes and pushing prices further down, a report from property consultancy Jones Lang LaSalle said. Some 2,000 homes were completed in Dubai in the second quarter and another 18,000 will be ready for occupancy by the fourth quarter, it said in a report, adding that total current residential stock will rise to around 322,000 homes. Office supply in Dubai is expected to grow by more than 30 percent over the next 3 years, it said. With liquidity slowly flowing back into the construction industry a few developers, including Nakheel, have recommenced work on projects, thereby raising fears of adding further supply to the market. "The residential sector is approaching the cycle trough and select pockets of stability are emerging, but, on average, sale prices and rents will continue to decline," Jesse Downs, head of management consulting at Jones Lang LaSalle said. Rents for apartments fell 3 percent in the second quarter year-on-year and average sale prices decreased by 1 percent, the report said. In Q2, sale prices and rents increased marginally in select upper end established villa communities such as Palm Jumeirah and Arabian Ranches. The majority of the residential market (apartments and mid market villas) continued to see sale price and rent declines. Landlords are becoming increasingly flexible, with the more widespread use of rent free periods (13 or 14 months for the price of 12) and other inducements including payment of tenant's air conditioning charges and flexibility on the number of rent checks required. Average apartment rents continued to decline (by 3 percent Y-o-Y and 1 percent Q-o-Q), with the greatest decline in the lower end segment. Average villa rents registered a Q-o-Q increase of 4 percent, a trend led by stronger supply-demand dynamics in higher
