Dubai\'s residential market for villas in prime locations is likely to remain strong during 2012 after seeing a three percent rise in Q1, CB Richard Ellis said on Tuesday. It said that the residential sector would see area-specific strengthening of rents, sales and occupancy rates as pipeline supply in developed locations becomes increasingly scarce. The market for established villa locations such as Emirates Living, Arabian Ranches and Palm Jumeirah will remain strong during 2012 with limited new inventory expected, CBRE added in a new report. However, new supply will enter from emerging areas such as Jumeirah Park, Al Furjan and Jumeirah Golf Estates, which will result in an expanding villa inventory over the next 12 to 15 months. The outlook for the villas market follows strong performance during the first quarter of the year during which it experienced positive rental rate growth for the first time since 2008/2009. Average lease rates increased by three percent quarter-on-quarter although rates remained down by around one percent year-on-year, the CBRE study said. The highest increase in lease rates took place in the two bedroom sector at five percent, followed by five and six bedroom units which both increased by around three percent. As per data provided by Dubai Land Department, residential unit transactions during the first quarter of 2012 totalled AED3.1bn, a nine percent increase compared to the previous quarter Developments such as Emirates Living and the Palm Jumeirah have shown positive growth over the last three quarters. Overall lease rates in Emirates Living have increased by six percent year-on-year, CBRE added. For apartments, the highest increase in Q1 was for one bedroom units, which grew by two percent while three bedroom units grew by one percent. Within the emirate\'s freehold areas, the highest increase in lease rates took place in the Greens at seven percent, followed by Downtown Dubai where rates grew by six percent. CBRE also said Dubai\'s commercial property market is likely to remain flat in 2012 as new supply keeps rents below 2005 levels. Around 171,500 sq m of new office space entered the market during the quarter, of which 76 percent is held on a strata title basis. \"The significant increase in stock, together with uncertainties regarding the management of strata title properties, is causing very low absorption rates for these types of properties,\" the report said. \"Dubai\'s CBD is expected to see further improvement in occupancy levels due to limited new stock, the availability of fitted office space, increasingly competitive lease rates and landlord incentives,\" it added. \"Secondary and tertiary locations will again struggle in terms of occupancy and lease rates as supply is comfortably exceeding demand in these areas.\"