Dubai: A tenant in Dubai looking for the cheapest one-bedroom option might have to set his sights outside of the city’s freehold communities.
And head for Deira, where he might get lucky with a one-bedroom starting from Dh35,000 a year, according to data from Asteco.
Rents fall in popular areas of Dubai, Sharjah
For a similar bargain option in Sharjah, the tenant should seek out either the Rolla area or Al Butina, where a one-bed starts from Dh18,000.
And in Abu Dhabi, the best rent options from a low entry perspective, would be in Khalifa City or MBZ City, where leases start from Dh40,000.
Pressure on what landlords can command as rents continue across the emirates, though much will eventually be decided by new supply getting completed this year.
“The Dubai real estate market is becoming increasingly fragmented, which has widened rental rate ranges considerably,” the Asteco report notes.
“Whilst the overall quarter-on-quarter decline for the residential sector has been minimal at 1 per cent, it is important to note that newly handed over, lower-end buildings in areas with significant supply potential, have struggled with take up, particularly where rates and incentives were not aligned with the market.”
Over a 12-month basis, rents in Dubai have dropped by around 10 per cent.
Supply and demand
On the supply side, the market expects to see a handover count of 30,000 new homes for the full year.
But so far, “only 3,650 properties (12 per cent) have been handed over in the first quarter of the year,” the report adds.
In Abu Dhabi, the first-quarter was relatively active on the handover side, with about 1,600 units delivered. More than 75 per cent of these were spread over Yas Island, Al Reem Island, Al Raha Beach and other investment zones.
While “more than 7,300 units are earmarked for handover before the end of 2018, previous delivery patterns suggest a number of these are likely to be delayed and will spill over into 2019,” the report states.
The expected supply includes more than 2,500 units on Reem, 1,800 homes on Yas and Saadiyat islands, and 1,650 plus units on the mainland.
Sharjah is the other emirate where a lot of new supply will be made ready in the second-half of the year.
The emirate continues to enjoy momentum in freehold sales, with new sales rounds garnering significant investor interest.
Launches include those from Arada, the Eagle Hills-Shurooq alliance, the Alef Group, and at Al Zahia, where Majid Al Futtaim Group is the joint venture partner.
Though no major residential supply was delivered in Q1-18:
Sharjah expects additional stock on completion of Nasma Residences Phase 1 and Al Zahia Residences, both due for handover by the end of the year.
What’s more, over 100 million square feet of residential developments (land area) are scheduled for completion by 2025 in Sharjah alone.
“Recently published legislation, allowing non-Arab nationals without a UAE residency visa to purchase properties in Sharjah on a 100-year renewable lease, is expected to stimulate demand and ultimately increase foreign investment in the real estate market.
On rentals, apartment rents across the northern emirates have dipped by 1 per cent on average since Q4-17, while recording an annual decline of 11 per cent.
“Further downward pressure on apartment rental rates is expected as delivery of supply in Dubai directly affects the recovery of rates in the emirates,” the report said.
