Dubai: Rents in most communities in Dubai have continued to fall, but despite the declines, a lot of people are still relocating to other areas in search for lower housing costs.
According to property specialists, reduced household budgets are driving tenants to move farther afield, where both new construction and existing communities are offering far more affordable options.
And if you haven’t already checked out, International City and Dubai Land are now the best places to live in for residents on a tight budget, according to the latest data released on Monday.
The two neighbourhoods now offer tenants an average rent of Dh60 per square foot, the cheapest anyone can find in Dubai today. That’s roughly Dh54,360 a year for a living space of 906 square feet, according to October 2017 figures compiled by a real estate specialist.
Tenants will also find affordable options in Dubai Investment Park, the second-cheapest neighbourhood where rents cost Dh64 per square foot. Rounding up the top seven best places for tenants who don't want housing costs to get in the way of their savings goals are Al Furjan, Dubai Silicon Oasis, Motor City and Discovery Gardens.
Where rents are cheapest
1. International City*
2. Dubai Land*
3. Dubai Investment Park
4. Al Furjan
5. Dubai Silicon Oasis
6. Motor City*
7. Discovery Gardens*
Flats in Downtown Dubai, on the other hand, are the priciest, with the average rent per square foot costing Dh117 a year. Tenants opting to live in the premium neighbourhood will have to shell out an average of Dh106,000 for a 906-square-foot apartment, slightly pricier than Old Town, where rents average Dh115 per square foot.
The research, published by Propertyfinder Group in its latest report, looked at various rental markets across Dubai and averaged the prices in each neighbourhood per square foot.
Where rents are priciest
2. Old Town
3. The Views
5. Dubai Marina
Propertyfinder Group said rent prices across the emirate continued to fall in October, with a median price per square foot of Dh89. Some communities have witnessed “modest” increases, but the majority have seen single-digit percentage declines in asking prices over the past six months.
“This can be directly attributable to the level of new stock being handed over. Many of these developments were sold to investors, some of whom had hoped to make a capital gain and flip (on-sell) at, or prior to, completion,” noted Lukman Hajje, chief commercial officer of Propertyfinder Group.
“But failing market has converted these speculators into buy to let investors. This affects not only the development itself but surrounding areas and rents within new and established projects in similar price points.”
According to Jesse Downs, managing director of Phidar Advisory, rents continued to head south in October this year, with declines averaging 3.8 per cent. This is largely driven by the combination of weak job growth, new supply handovers and reduced housing budgets.
Downs said that as newly developed communities opened up in outlying areas, more tenants relocated away from the city centre, to take advantage of lower rents. This has left a lot of vacancies in popular locations.
Where rents have dropped the most
The biggest rental declines were observed in Discovery Gardens, where rents dropped more than 9 per cent in October 2017 compared to April 2017.
“Historically one of the most affordable developments in Dubai, it is facing increased competition from new affordable projects across Dubai,” added Hajji.
The only area that bucked the trend is Dubai Investment Park, where rents moved in the opposite direction, rising by 3.5 per cent during the same period.
* Locations with similar median asking rents.