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Property group says Dubai rents easing

Thursday, Apr 16, 2009

Gulf News

Dubai: There is good news on the horizon for Dubai tenants who wish to upgrade from their current property as apartment rents have dropped 22 per cent and villa rents have fallen 34 per cent over the last quarter, according to the latest industry report.

The average rent for a studio is Dh61,500, for a one-bed apartment Dh93,000, for a two-bed apartment Dh132,500 and Dh185,000 for a four-bed apartment, says the report by property management company, Asteco.

"Unit owners have realised that they can no longer expect double-digit yields, thus they have to compete for the shrinking tenant pool as people leave and supply increases," the report noted.

The Asteco report comes just days before Dubai's Real Estate Regulatory Authority (Rera) is due to release the much-anticipated revised rental index.

Marwan Bin Galita, chief executive of Rera, said he could not comment on the rents displayed in this report.

The biggest rental drops were in Palm Jumeirah, Al Barsha, Bur Dubai and Discovery Gardens where average rents are around 30 per cent lower then in quarter four 2008.

"Discovery Gardens was one of the first affordable areas so there was a big demand which [caused]) very high rents. In those early days, people were happy to pay high rates, but now with International City and other options, people are able to choose," Andrew Chambers, managing director of Asteco, told Gulf News.

Matthew Green, associate director, research and consultancy at CB Richard Ellis, said a studio in Discovery Gardens would have gone for around Dh70,000 per year last summer, can now be had for around Dh40,000 or Dh45,000.

Many speculators and investors in Palm Jumeirah, especially on the shoreline, bought more than one property and they still need to cover the mortgage so they are more willing to lower the rents to get cash flowing in, Chambers added.

"The Palm Jumeirah makes sense. There are less executive salaries being handed out so it's a logical decline," Green said.

Villa rents have also tumbled with the largest fall of 41 per cent seen in the Springs and Jumeirah Islands.

Despite the figures quoted in the report, apartments and villas are out there at much lower rates. For example, it is possible to rent a two-bedroom villa plus maid's room for Dh100,000 in Arabian Ranches and a three-bedroom villa in the Springs for Dh95,000.

"A number of landlords are desperate to get their properties rented out and will take a significant reduced rate. It's a difficult time to get specific figures on rents," said Green.

Lower rents in Dubai also mean that people who had been priced out of the market and moved to Sharjah or Ajman are now able to come back to Dubai.

Residential sale prices fell the most in places where there is a lot of apartment supply and competition, such as Jumeirah Beach Residence, Dubai Sports City and parts of Dubai Marina.

In terms of office sales, prices were slashed 55 per cent in Downtown Jebel Ali and 50 per cent in Jumeirah Village.

Former hotspots in the business world also experienced sharp rent decreases, 43 per cent in Tecom , 41 per cent in Deira and 40 per cent in Bur Dubai. DIFC and Dubai Healthcare City (DHCC) were the least affected, Chambers said.

© Gulf News 2009. All rights reserved.