Property rent drop to continue in Dubai
However, certain residential units in key locations will remain stable, experts say
Dubai: With more supply entering the market, residential rents will continue to drop in most areas, according to Landmark Advisory's April 2010 Dubai Lease Guide.
Jesse Downs, director of research and advisory services at Landmark Advisory, sees rents falling in most areas in the coming months, "especially for lower quality buildings in the least developed and integrated communities. However, certain residential units in key locations within established high quality developments will remain stable; this applies to specific villa developments and select apartment buildings."
These include quality, well-located units in limited supply.
"For example, in some larger villa developments there is a distinct unit type of which a limited number of units have been built. These typically experience price stability because inventory is hard to find. Palm Jumeirah villas tend to be quite stable and prices appeared to bottom out in 2009 and recovered thereafter. This is because inventory levels are manageable and there are plenty of current owners using those villas as second homes.
"For the apartment sector, this primarily refers to units in specific buildings and, most often, specific units within the building. Good examples of this are apartments in Downtown Burj Khalifa that are well positioned around the core of the community, usually with fountain views. Overall, apartment rates in Dubai Marina are also likely to decline.
"Given the amount of new supply anticipated in the Marina, average rents for all unit types will continue to decline. For example, 13 per cent of new residential units expected to be delivered in 2010-2012 are located in the Marina.
"The area as a whole will experience softening of rents. However, as always, not all assets are equal and more competition means the high quality developments with the best amenities and facilities will fare better than the rest."
Villa rent ranges remained fairly stable with areas like Arabian Ranches, Victory Heights, and parts of The Lakes dropping among lower limit properties.
