DUBAI:
Even the more rent-friendly neighbourhoods in Dubai are now offering more rate options for tenants.
Properties in Deira and those at International City and Discovery Gardens have seen rents go down by 3-4 per cent in the second quarter compared to levels seen in the first three months of the year.
Over a 12-month period ending June, these locations have gone through declines of 14 per cent on average, according to the latest estimates by Asteco, while homes in Jumeirah Village have seen asking rates dip 16 per cent.
What this means for a tenant is that he will need to pay between Dh35,000 and Dh65,000 for a one-bedroom in Deira, and Dh45,000-Dh60,000 for one in Discovery Gardens. At Sports City, the rental range for a one-bed is Dh43,000-Dh60,000, the report finds.
Over the last two years, the brunt of the decline in rents had been felt by the top-end of the property market. This was obvious in the asking rates landlords were trying to get on their properties at Dubai Marina or the Palm. In comparison, mid- and more affordable locations in Dubai seemed impervious to rental pressures.
Now, that no longer is the case.
Can landlords expect to reverse the direction any time soon? It will depend on where new supply comes in, or more importantly, how much of new supply makes it.
Developers in Dubai were expected to deliver 15,000 new apartments in the first six months, but only managed to turn in 5,400. If this is the pace continuing into the second-half, it could have a bearing on where rentals are headed next year.
But Asteco reckons that even the 5,000 new homes in the first-half can still have a decisive say. “This contributed to an overall quarterly drop in apartment and villa rental rates of 3 per cent and 2 per cent, while annual declines were more prominent at 12 per cent and 10 per cent, respectively,” the report notes.
“Vacancy levels in many projects rose as a result of the additional inventory, although some locations and/or developments were able to maintain good occupancy rates. Landlords offering discounts also facilitated tenant retention.”
What of rental changes in the mid and higher end of the residential spectrum? Apartments at the high-rises in DIFC and Downtown are now down 10 per cent on a 12-month basis. A one-bedroom at DIFC starts at Dh70,000 and in Downtown from Dh65,000. And the towers along Shaikh Zayed Road have lowered their rents by an average of 12 per cent, with one-beds now available from Dh65,000.
Further down Shaikh Zayed Road, the tower clusters of JLT and Jumeirah Beach Residence are down by 14- and 15 per cent, respectively.
As for likely trends in the next six months, Asteco says: “Accurate projections are problematic and may well be subject to further revisions. In addition to the delay factors, further variations may result from developers extending project phasing time frames.”
Asteco now expects about 25,000 units to be handed over in the full year, down from 30,000.
