Dubai: If you have long wanted to rent your own room or flat in one of those high-rises in your favourite location, this year might be a good time to do it. The Dubai property market is in for another round of falling rents in 2018, industry analysts told Gulf News.
According to various sources, the glut of homes available to rent, coupled with a slow demand, will push down the rental values by a mid-single-digit percentage this year, continuing the slowdown that has been witnessed for more than three years now.
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As of January 2018, apartment rental prices continued to spiral downward by 7.43 per cent compared to the same period last year. And between the 2014 peak and last year, apartment rental rates declined by 16 per cent to 20 per cent, depending on the size of units.
“The high rate of handovers is putting downward pressure on rents, as supply, for now, is outpacing demand,” Lukman Hajje, chief commercial officer of Propertyfinder Group, told Gulf News.
“We expect that apartment rents in Dubai will continue to soften in 2018. Low to mid-single-digit percentage declines are expected across most communities, continuing a trend we’ve seen now for more than three years.”
Craig Plumb, head of research at JLL Middle East and North Africa (Mena), noted that there remains a large supply of apartments, as well as villas, due to enter the market this year. The influx of newly completed properties will consequently provide tenants more options, and therefore, put a pressure on landlords to lower their asking prices.
“While sale prices are expected to stabilise in Dubai residential market in 2018, rental levels are likely to decline further. This is partially due to the normal time lag between changes in the sale and rental sectors of the market, and partly due to the aggressive marketing of new launches that are targeting those that currently rent their accommodation,” Plumb said.
Data released by the Dubai Land Department showed that more homes have flooded the market, with the developers registering 150 projects in 2017 alone and turning over 90 projects to the tenants.
A lot of these properties are designed to cash in on the middle-income segment of the market, according to Hajje, and as more “affordable” residential units are made available, landlords in surrounding areas are forced to bring down their rates to compete for tenants.
“And while sale prices continue to decline, speculative investors are forced to shift strategy and become landlords; adding to the rental pool, and further driving down rents. With more apartments getting built, this renter-friendly climate isn't likely to change anytime soon.”
Jesse Downs, managing director of Phidar Advisory, said their own indices show that rents fell 1 per cent in January compared to a month earlier, and 9.1 per cent compared to last year.
“Rents will continue to erode in 2018 due to moderate supply expansion and weaker demand, especially in the sectors targeting mid-high and high-income households,” Downs said.
Showing a similar trend, REIDIN’s Dubai Property Price Index for all residential properties posted a 0.43 per cent monthly decline in January 2018 and 7.65 per cent drop year on year. Rates for apartments alone dropped by 7.43 year on year.
However, certain communities that are popular within the middle-income segment are showing a slightly different scenario. REIDIN noted that rental rates in Discovery Gardens, Jumeirah Village Circle and Dubai Silicon Oasis have shown “minor uptick changes.”
But overall, the firm said, “the fast decline in rental prices is still effective – which is of course good news for tenants.”
Asteco’s review of the market showed that as of 2017, the rental prices for one-bedroom flats in Dubai declined by 19 per cent since the 2014 peak. Leasing rates for two-bedroom and three-bedroom units posted declines of 20 per cent and 16 per cent, respectively, during the same period.
