Dubai: The cost of renting an apartment in Dubai fell a further 8-10 per cent in the first quarter of this year, according to a new report by Cluttons.
The property consultancy said there were signs of a ‘flight to quality' developments with many tenants taking advantage of the city's oversupplied marketplace.
The villa rental market proved slightly more resilient in the more established freehold areas but is expected to soften during the summer months, Cluttons said.
"High-end units, especially villas, have levelled out but we do not expect that to be the case over the course of the summer, which will be a big strain on landlords and property owners," said Richard Paul, Associate Director at Cluttons.
"It is better news than we have heard over the last 12 months when there was a lot of talk of a two-tiered market. The situation in Dubai now is that there are multiple tiers and they are all being affected by the continuing ‘flight to quality' developments," he added.
On the sales side, the report shows that prices have stabilised over the last three months with the value of villa developments such as Arabian Ranches, The Meadows and Palm Jumeirah seeing little or no movement.
Less desirable villa locations, such as Victory Heights and Motor City, saw a moderate 3.6 per cent decline on the fourth quarter of 2010.
The value of residential apartments in areas considered the lower end of the marketplace, such as Discovery Gardens and International City, fell by 8.9 per cent on the last quarter. Apartments in more ‘high end' locations such as Dubai Marina, Old Town and Palm Jumeirah witnessed drops of 3.7 per cent during the same period.
"Villa prices and rentals are also expected to fall in some areas due to the increase of new freehold units in developments such as The Villa, Falcon City, Sports City and Jumeirah Village," the report said.
Cluttons said many new developments lacked local amenities and community facilities, which in turn causes values to drop and puts pressure on the demand for better known areas.
However, it also highlighted several positive moves as mortgage lenders — including Barclays, Standard Chartered and Gulf Finance, continue to fight for an improved market share by offering competitive terms to a wider range of clients.
"As well as offering mortgage rates for as low as 4.99 per cent, banks are slashing arrangements fees and timescales to process approvals in an attempt to attract the limited market available," the report said.
