JLL’s latest UAE Real Estate Market Performance report says that sectors across the UAE’s property market continue to be tenant-friendly in the third quarter of 2020, with the residential sector recording an increase in construction activity and the retail sector witnessing an increase in revenue share-based agreements.
According to the report, Dubai’s office market saw its first new stock additions of the year, with a total of 190,000 sq m of office gross leasable area (GLA) delivered in DIFC, Downtown Dubai and MBR City, bringing the total stock to 8.9 million sqm. of GLA. Comparing 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 report added that incorporation of sustainability and health and wellness standards are also expected to raise the bar for new market entrants and promote responsible real estate agenda in Dubai and the region.
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 stated that developers will 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.
Meanwhile, the retail sector, across Dubai and Abu Dhabi, witnessed an increase in revenue share-based agreements, allowing retailers to minimise risk on capital expenditure, JLL added. 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, the report stated.
Dana Salbak, Head of Research at JLL MENA, said: “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.”
Additionally, the hotel sector is also witnessing an ongoing demand from domestic tourists, with increased appetite for beachfront hotels and private villas as residents look to capitalise on affordable luxury stays, the real estate market report says. Going forward, the lower market segment and business hotels are expected to take time to recover as the current priority is to manage cashflow and working capital, it concluded.
