Dubai: The property market in Dubai remained favourable to tenants and buyers in July, with rents continuing to fall and prices in some locations still showing a downtrend.
The cost of renting flats across various communities registered an overall decline of 2 per cent last month compared to the same period in 2015, according to a real estate portal with thousands of property listings.
The average annual rent for studio apartments in Dubai stood at Dh57,000, down by 6 per cent from a year ago, but stable when compared to the average rent in the first six months of 2016.
The cost of renting one-bedroom residential units averaged Dh92,000 a year, registering a 7 per cent drop when compared to the average rent in the first half of 2016.
Two-bedroom apartments cost tenants Dh145,000 a year as of July, still cheaper by 3 per cent. No major cost adjustments were noted in the three-bedroom category, but bigger units posted a 2 per cent decline when compared to the average rental value in the first half of 2016.
“Overall, however, apartment rents were seen becoming more and more affordable, with a total downward adjustments in July of 2 per cent,” said Bayut in its latest analysis sent to Gulf News. The property portal, however, said that the average rental yield across all bed categories recorded an uplift of 5.6 per cent.
Also in July, apartment prices in some locations registered declines averaging 1.3 per cent when compared to the previous month.
The majority of the properties, particularly villas, however, saw no negative adjustments, while those in mid-affordable locations posted monthly increases of 1.1 per cent to 3.9 per cent, according to the July 2016 ValuStrat Price index.
The property market has been sluggish as a result of declining oil prices, softening of business activity and slowdown in recruitment and expansion plans of companies dependent on petrol revenues. The strong US dollar also rendered properties in the UAE more expensive for foreign buyers holding non-US dollar currencies.
The sector was earlier forecast to continue facing some headwinds in 2016, with property prices expected to drop by 10 per cent on average. However, the current popular sentiment seems to point to the market nearing its bottom.
“Rental prices are now in the phase of bottoming out [however] tenants still have the upper hand with more negotiating power,” said Ann Boothelo, senior product marketing manager for property at Dubizzle. She noted that in the bid to attract tenants, landlords in Dubai are offering competitive prices and letting tenants pay with three- or four-cheques, to avoid having vacant properties.
“The residential market is currently at a cyclical trough, having softened about 15 per cent since its peak in mid-2014. Providing there are no major external shocks over the rest of the year, we expect the Dubai residential market to recover in early 2017,” said JLL in its latest report.