Dubai: Tenants can now breathe easy as realty experts predict residential rents to remain stable or fall slightly next year.
“Rents in Dubai are now close to their peak. They have risen 50 per cent in the last two years and the market is showing signs of slowing down. In the last three months, rents largely remained stable or dropped slightly in certain parts of Dubai. Even areas like Discovery Gardens, International City and Dubai Sports City which recorded particularly steep rent hikes over the last year saw marginal declines in October and November. Going forward, rents are likely to remain stable in 2015,” Craig Plumb, head of research at JLL MENA, told XPRESS.
According to Asteco Property Management, rents for three-bedroom apartments in Dubai Marina range from Dh150,000 to Dh270,000. In Downtown Dubai, they hover between Dh210,000 and Dh290,000. In Discovery Gardens, two-bedroom apartments fetch between Dh80,000 and Dh90,000.
No significant changes
Plumb said rents in Bur Dubai and Karama are unlikely to see any sharp increase or decrease as not many new buildings have come up there. “The rental market in Bur Dubai and Karama is mainly coming from people renewing their existing contracts which are governed by the rent cap. Landlords in these areas will not be able to hike rents significantly.”
According to the Real Estate Regulatory Authority’s (Rera) rental calculator, the average rent for a two-bedroom apartment in Al Mankhool area in Bur Dubai is between Dh80,000 and Dh95,000.
Those paying 21 to 31 per cent less than the average may see a 10 per cent hike.
Mario Volpi, managing director, Ocean View Real Estate, said villa communities like Emirates Living and pockets of Arabian Ranches have seen a softening in rentals. “Landlords will not be able to lease their property if they ask for high rents. A property owner who was asking Dh320,000 for his four bedroom Meadows villa had to finally settle for Dh275,000 to secure a rental deal,” he said.
“Other areas like Dubai Marina, Jumeirah Lakes Towers (JLT), Palm Jumeirah and Downtown Dubai are recording stable rents. We are not seeing any sharp movements one way or the other and I don’t believe this is going to change in 2015,” he said.
According to Ocean View Real Estate, two-bedroom apartments in JLT fetch between Dh120,000 and Dh148,000. “Rents for three-bedroom townhouses in The Lakes hover around Dh225,000. In International City, two-bed-room apartments fetch around Dh75,000,” he said. John Stevens, Asteco managing director, said apartment and villa rentals dropped two and three per cent respectively in the last quarter.
Around 30,000 new homes are likely to be added in the next two years in New Dubai areas which will make rents even more affordable. “It may feel like a long wait for many frustrated tenants, but this will also provide the much-needed stock in the run-up to Expo 2020.”
According to Volpi, landlords will have to make their rent payments more flexible in order to secure a tenancy contract. “Tenants are looking for landlords offering flexible rental plans. If landlords are rigid and ask for a single cheque, they are likely to find it hard to lease their property. Ideally landlords should agree to at least four cheques if they want their property taken up quickly.”