Dubai: Despite conflicting claims on whether or not Dubai’s property market is bottoming out, several real estate experts could agree on one thing: rents are still favourable to a large part of the tenant community.
During the first half of 2016, overall residential rents in Dubai were estimated to have dropped by 4 per cent to 6 per cent, according to various reports compiled by Gulf News.
Phidar Advisory’s latest rental market review indicated that a number of residential locations, including the Palm Jumeirah, Dubai Marina, Jumeirah Lakes Towers, Discovery Gardens and International City continued to post declines, with gross apartment rents dropping by an average of 5.7 per cent in June compared to a year earlier.
A similar trend is reflected on the latest figures released by the REIDIN general index for rents, which showed that average lease rates slipped 4 per cent during the same period. Property portal Bayut.com put down the rental decline for the same period at 6 per cent, with average rent for 1-bed and two-bed apartments dropping to Dh99,000 and Dh150,000, respectively.
“The first half of 2016 has left tenants [in Dubai] with something to celebrate. With rents adjusting downwards compared to the same period last year, many housing options across Dubai have become much more affordable than they were in 2015,” the portal said in its UAE market report.
Real estate companies, agencies and brokers use different methodologies and data sets when analysing market trends, so estimated price changes can vary from one source to another, but a general trend should be easy to spot.
Phidar Advisory boasts of accurate analysis through its team of professionals with decades of market experience, while REIDIN is a go-to source for many of the leading real estate brokers and industry analysts in the UAE. Bayut.com has its own huge database of property listings.
According to Jesse Downs, managing director at Phidar Advisory, soft demand owing to fewer employment opportunities, has helped keep a damper on rents, especially for larger, more expensive apartments. The trend is expected to continue for another 12 months, or until more jobs are created.
Phidar’s data showed that rents in premium quality units dropped by 7.8 per cent in the last year and 1.9 per cent in the last month. Villa rents dropped 10.8 per cent year-on-year and 0.8 per cent month-on-month.
“Demand is weaker for homes that appeal to mid-high and high-income households. At the moment, it seems that job growth for this demographic is particularly low,” Downs told Gulf News.
The trend is not the result of oversupply because there haven’t been many apartments delivered. “New supply handovers were very low in 2014 and 2015, some of the lowest years in a decade,” Downs argued.
“In the first half of 2016, the new supply completed was only about 2,000 more units than was handed over in the same period last year. It’s important to remember that we’re comparing this to 2015, which was a very low year. Also, this is not a large number of new homes for Dubai because this is typically absorbed in five weeks in an average year.”
According to Jones Lang LaSalle, the latest data from REIDIN still suggest that rents have remained “largely unchanged” and that the market is currently at a cyclical trough. It expects market recovery to be delayed partly due to Brexit fears.
"The negative perception and uncertainty resulting from Brexit may contribute to a delay in the market recovery. Providing there are no major external shocks over the rest of the year, we expect the Dubai residential market to recover in early 2017.”
Phidar Advisory has compiled a list of property locations where rents have fallen in June.
Year-on-year decline:
Downtown Dubai: -4.2 per cent
Palm Jumeirah: -12.2 per cent
The Greens/Views: -5.7 per cent
Dubai Marina: -6 per cent
JBR: -4.7 per cent
JLT: -5 per cent
Discovery Gardens: -2.5 per cent
International City: -2.8 per cent
Average: -5.7 per cent
Month-on-month decline:.
Downtown: -0.3 per cent
Palm Jumeirah: -1.1 per cent
Greens/Views: -0.9 per cent
Dubai Marina: -0.9 per cent
JBR: -0.8 per cent
JLT: -0.3 per cent
Discovery Gardens: -0.6 per cent
International City: -0.2 per cent
Average: -0.7 per cent
*Not all residential properties were included in the rental review. Only apartment units with similar sizes were tracked, to establish a more accurate trend and avoid skewing results.
