DUBAI

Following two years of significant capital and rental growth across much of Dubai’s real estate market, 2015 marked a turning point in the market. At the beginning of 2015, we predicted a decline in residential sales prices in Dubai, which averaged approximately 9.5% across all submarkets.1 There was also a greater proportion of residential sales transactions in the sub AED 2 million price bracket (77% in 2015, 68% in 2014 and 70% in 2013), reflecting a shift towards more affordable accommodation across different submarkets. Across the hospitality market, hotel occupancy and Average Daily Rates (“ADR”) were down by -1.4% and -7.4% respectively in 2015, although hotel performance is still strong in a global context. The 2015 Mid-scale and Upper Mid-scale hotel pipeline growth of 217% in Dubai, against the known pipeline in 2014, resonates with our prediction of heightened activity in Dubai’s mid-market hotel sectors. We predicted that a number of new office schemes would be announced in key districts in Dubai in 2015, demonstrated by ICD Brookfield Place in Dubai International Financial Centre (“DIFC”) and the Burj 2020 District in the DMCC Free Zone. Our prediction of increasing polarization within office districts became increasingly evidenced by variable occupancies across key office submarkets in Dubai and rental variation within districts, as a result of variable quality and a supply shortage of well located stock.