Dubai: Rents are likely to fall by five to 10 per cent in the next six months in Abu Dhabi, Dubai and Sharjah, according to real estate experts in the UAE.
Redundancies and an oversupply of housing units are cited as the main reasons.
“Rents are dipping in Reem Island and Corniche owing to an oversupply of residential villas and apartments. Last year, a one bedroom apartment in Gate Tower on Reem Island was leasing for Dh90,000 annually. Now you can get it for Dh80,000,” said Ben Crompton, managing partner, leasing, sales and property management, Crompton Partners Estate Agents.
“During summer, we usually see rental prices go up as companies hire people during this time. But recent job cuts are likely to negatively impact rents in the capital. A fall between five and 10 per cent is expected in the next six months,” Crompton said.
Craig Plumb, head of research – MENA, JLL, said villa and apartment rents have dropped by 10 per cent in Abu Dhabi in the last 12 months and the trend is likely to continue.
“A two-bedroom apartment in the Corniche area fetches between Dh120,000 and Dh140,000, a 10 per cent drop over last year. A lot of housing units are lying vacant due to oversupply.”
Plumb said rents in Dubai have declined by three per cent for apartments and eight per cent for villas in the last year. “Rents are currently close to the bottom of their cycle,” he said.
In Dubai Marina, for instance, rental prices have declined by 10 per cent in the last year. Two-bedroom apartments here commanded a rent of Dh150,000 in 2016. Now they are available for Dh140,000.”
Niraj Masand, director, Banke, said two-bedroom apartments in Bur Dubai are renting out for Dh110,000. “Barely an year ago they were going for Dh140,000. Similarly in Karama two-bedroom apartments that fetched between Dh130,000 and Dh140,000 in 2016 are now available for as less as Dh100,000,” he said.
Masand reckons Dubai will see a significant rent drop owing to oversupply in the market. “Despite prevailing market conditions, many landlords are refusing to lower their rents. As a result, many units have fallen vacant. Eventually, they will have to relent.”
Masand said like in other emirates, rents have also fallen in Sharjah because of oversupply of properties. “The slide is likely to continue for another six months.
“Now you can get a two-bedroom apartment in Al Nahda for anything between Dh50,000 and Dh60,000. You had to pay at least 10-15 per cent more for the same units last year. Besides oversupply, we are also seeing a ripple effect of what is happening in Dubai. Because of the rent drop there, many Sharjah residents are finding it the right time to move to Dubai, which has resulted in a lot of vacant flats in Sharjah. We predict rents will drop by another 10 per cent in the emirate in the next six months.”