Sunday, Jul 26, 2015

Dubai: Dubai’s residential rents, which dropped further by an average of three per cent in June, will go back up as soon as the emirate starts working on the real estate projects slated for the World Expo in 2020, an analyst said.

“The trend is expected to reverse when the Expo 2020 projects are awarded for construction, in turn leading to increase in population in Dubai,”

Paul Maisfield, CEO of MPM Properties, a real estate advisory subsidiary of Abu Dhabi Islamic Bank (ADIB), told Gulf News.

The latest report by ADIB and MPM Properties showed that Dubai’s total housing stock surged to nearly half a million (479,000) residential units, as 6,750 new properties were added during the second quarter this year.

According to Maisfield, rents in some areas in Dubai are still flat, while in others, the rates are declining. Certain locations, however, are seeing more entry of tenants who have moved out of their previous apartments or villas in search of cheaper alternatives.

“The 479,000 units is the total stock in Dubai and has fairly high occupancy in prime areas and good developments. The rest of the areas are witnessing an increase in occupancy as new supply enters, as the rent reaches a point where tenants are priced out and forced to look elsewhere for cheaper options.”
The new report echoes previous studies that demonstrated a downtrend in Dubai’s residential rents. In its second quarter report, Asteco said rental rates for apartments and villas across Dubai fell by 2 per cent on average in the second quarter compared to the first quarter of the year. Villa rates registered a significant decline of 5 per cent year-on-year.

The highest quarter-on-quarter declines were noted in properties along Shaikh Zayed Road (7 per cent), Palm Jumeirah (6%) and Jumeirah Beach Residence (7 per cent). Apartments in IMPZ, Dubai Sports City and Dubai Silicon Oasis, however, showed rental increases of between 6 and 13 per cent.

According to ADIB and MPM Properties’ report, Dubai’s completed apartments saw capital values dropped by 3.5 per cent quarter-on-quarter. Among the areas monitored, Business Bay registered the biggest decline of 5 per cent.

The market data and rental indices mentioned in the report were based on the live transactions from MPM’s agency team and its property portfolio of over 23,500 residential properties, offices, hotels and malls.

“The volume of new projects in the Dubai market means that properties will increasingly need to appeal to potential buyers’ sense of value,” said Maisfield.

“That means a shift towards well-managed, self-contained mid-market properties, particularly close to the Expo 2020 site. We are also seeing a greater emphasis on buyer incentives and unique selling points, especially in the luxury segment and expect buyers to benefit from these trends.”

By Cleofe Maceda Senior Web Reporter

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