Housing rents will continue to inch downward this year for tenants in Dubai and other parts of the country as more residential supply is expected to enter the market, according to property analysts.

Thousands of new units, mostly apartments, are expected to hit the Dubai market early this year, while the neighbouring communities in Sharjah, Ajman and Ras Al Khaimah are also expected to get additional residential supply.

“This increase in supply, coupled with continuous handovers in Dubai, will result in further drops in rental rates across all sectors,” real estate services firm Asteco said in its latest report.

Property rents and sales prices in the UAE have been declining since the fall in oil prices in 2014. Some industry sources have said that the decline could continue until after the World Expo 2020.

Property Monitor had previously reported in December that there are still 50,000 new units that are scheduled for completion in Dubai early this year, with apartments making up the bulk of the upcoming supply.

With this high supply, Chris Hobden, Head of Strategic Consultancy at Chestertons Middle East and North Africa (MENA), agreed there is indeed a likelihood that rents will continue to trend downwards. However, he said, the rate of decline will be lower than what was observed in 2019.

“Overall, Dubai residential rents will likely decline on average, although we expect this to be at a lower rate than over 2019, and rents may level out in certain districts,” Hobden told Zawya on Sunday.

Firas Al Msaddi, CEO of fam Properties, told Zawya that the real estate market has yet to reach the bottom and that it will take about three years for the market demand and supply dynamics to even out, hinting at further downward price movements.

The property market saw the entry of master-planned communities in 2019 that cater to the affordable housing market segment, such as the Phase 2 of Nasma Residences along Emirates Road (E611), as well as the stand-alone projects in various emirates.

“The growing supply of properties at reduced rental rates in Dubai resulted in an increased number of residents in the northern emirates, particularly in Sharjah, relocating closer to their place of work [in Dubai],” Asteco noted.

(Writing by Cleofe Maceda cleofe.maceda@refinitiv.com, editing by Seban Scaria)

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