Dubai: Tenants are now putting their emphasis on location and size thanks to lower rents in Dubai. Those who could not afford a two-bedroom apartment earlier are finding it affordable now.
Rents are still falling slightly despite leasing rates mostly stabilising in the last two months.
Studios experienced a steep 26 per cent decline in the fourth quarter of 2009 compared with the second quarter of 2009.
Rents for one-bedroom apartments fell 25 per cent, two-bedroom fell 18 per cent and three-bedroom fell 13 per cent over the same period, according to Colliers International.
The number of leasing transactions peaked in August 2009, Liz O'Conner, director of residential sales and leasing at Better Homes, said. "Traditionally, the peak occurs in the summer months before the start of the new school year in September. In terms of inquiries these dropped in December, which is the case historically every year, but remained stable from July to November."
According to Jesse Downs, director of research and advisory services at Landmark Advisory, higher quality residences have seen a higher incidence of rents stabilising.
"The flight to quality trend continues across Dubai with lower-limit rents for high-end units in Downtown Burj Dubai increasing by 13 per cent. However, low-end units have failed to show similar rental growth, with rents continuing to decline in some areas. An example is the Country Cluster units within International City, where lower-limit rents fell 12 per cent."
Flight to quality
A report by Colliers International shows the largest decrease in rents in communities catering to the middle to low-end market, which saw a year-on-year rental decline of up to 75 per cent.
Given the falling rents across Dubai, tenants in these middle- to low-end communities are opting to move into communities offering better quality units.
Middle to high-end communities having already experienced a year-on-year rental decline ranging from 21 per cent to 76 per cent and are now expecting an increase.
According to Landmark Advisory's November/December leasing guide, some areas such as Jumeirah Lake Towers (JLT), which attracts residents commuting between Dubai and Abu Dhabi, have seen lower-limit rents grow nine per cent.
Villa rents in areas such as Jumeirah and Emirates Living have largely stabilised over the last two months.
"Units in good locations and of higher quality have largely stabilised and, in some cases, shown increases in both rental rates and sale prices. Good location currently means either in proximity to the DIFC, or in the primary areas of new Dubai that appeal to the Abu Dhabi commuter set," Downs said.
Dubai Marina, Jumeirah Beach Residence (JBR) and Palm Jumeirah have so far experienced the largest gains. Most of the properties in these developments are ready, which under current market conditions, is a key selling point for new buyers and tenants.
On the other hand, JLT, Discovery Gardens, The Greens, Emirates Living, and Dubailand have sustained the largest losses.
Laura Martorano, CEO of Leo Sterling, said: "This is due to the increasing availability of related, similar or better properties in adjacent communities. JLT apartments face stiff competition from other JLT towers, while Arabian Ranches has to compete with similar villas in Dubai Sports City and Green Community
New trend
"Today you can secure a two-bedroom apartment in the Dubai Marina for between Dh80,000 and Dh100,000, but you can also get a two-bedroom villa for almost the same price range in The Springs."
The quality of accommodation and maintenance fees will continue to differentiate rental rates.
Elaine Jones, CEO of Asteco Property management, said: "Well-developed areas with facilities including education, medical, retail religious and transport will be in higher demand and therefore rents would logically be higher there than in a poorly serviced area.
"The amount someone is prepared to pay for a property will also be determined by quality of management and maintenance. In two identical buildings, adjacent to one another but managed by different parties, the achievable rent and level of occupancy is likely to differ."
One-bedroom apartments
- Palm Jumeirah: Dh85,000 to Dh130,000
- Dubai Marina: Dh60,000 to Dh115,000
- Jumeirah Lake Towers: Dh55,000 to Dh85,000
- Old Town: Dh80,000 to Dh120,000
- International City: Dh35,000 to Dh45000
- Motor City: Dh50,000 to Dh65,000
- Discovery Gardens: Dh50,000 to Dh60,000
Four-bedroom villas
- Palm Jumeirah: Dh350,000 to Dh420,000
- The Springs: Dh150,000 to Dh180,000
- The Lakes: Dh220,000 to Dh250,000
- Jumeirah Village: Dh180,000 to Dh200,000
- Mirdiff: Dh120,000 to Dh180,000
- Arabian Ranches: Dh250,000 to Dh260,000
Do you agree that rent prices are stabilising? Did you have a bad experience when you renewed your contract?
