DUBAI: Residential rents in Dubai are set to fall further in 2010 due to increased supply, while vacancy rates in Abu Dhabi’s office market are expected to rise to as much as 10 percent in 2011, a report said on Monday.
Real estate services company CB Richard Eliis (CBRE) said it expects 31,194 new homes in 2010, 29,388 in 2011 and 21,870 in 2012.
"Increased supply from the residential sector will see a further drop in lease rates. However, the effect would be higher on villas than apartments," it said in the report.
CBRE expects around 3.42 million square metres of new office space between 2010 and 2012, from 4.7 million square meters now.
Dubai’s residential market, already oversupplied by about 20 percent, would fall further with the addition of 41,000 homes between now and the end of the year, Colliers International said this month.
Colliers estimates total office space will rise to about 6.4 million square meters by the end of 2011, from about 3.6 million square meters at the end of 2009.
"Whether the market has reached the bottom already or is gearing towards stability is yet to be seen," CBRE said in its report on Monday.
Around 390,000 square meters of Grade A office market stock is expected to hit the market by 2011, the report said, adding that vacancy rates are seen between 8 and 10 percent in 2011, up from 2 percent in 2009.
Office rental rates in the first quarter were 52 percent lower than their peaks in the third quarter of 2008, it said.
House prices and rents in Dubai are set to fall 10 percent more in 2010, and fall 10 percent and 15 percent respectively in Abu Dhabi, a Reuters poll showed in April.