The significant new supply of smaller units coupled with the overall improvement in affordability has given the tenants an opportunity to rent larger properties at lower rates, states the report.
Matthew Green, head of research and consultancy UAE, CB Richard Ellis Middle East, says while there is an increasing degree of stability in the leasing market, the general trend is still downward.
"Areas that are seeing significant supply from multiple new projects continue to be most impacted as heightened competition and a greater level of choice is resulting in further rate reductions as landlords scrabble to secure tenancies in fear of growing rental voids. Obviously the rate of decline has slowed considerably and we are hopeful that this prolonged period of constancy will in time begin to build some more positive sentiment in the market."
Jumeirah Lakes Towers (JLT) and The Greens have been the most affected developments and Green attributes this to huge volumes of new supply that have come on stream in a very limited period.
While JLT has been adversely affected by infrastructure issues in terms of road networks and the lake, it is the traffic congestion in and around The Greens and the emergence of new properties such as Dubai Marina at competitive rates that has resulted in rising vacancy rates and reduced leasing potential in the development, explains Green.
He expects Q3 to be subdued with the usual summer slowdown and Ramadan. "With a large portion of the resident population choosing to take vacations to avoid the summer heat, the quarter is likely to see reduced activity across the board which could have a further impact on leasing rates," says Green.
bpanicker@alnisrmedia.com
