Dubai rents continue to decline 30 percent in August

According to Landmark Advisory, the leading real estate consultancy firm, the cost of leasing apartments in International City, Discovery Gardens, Palm Jumeirah, Jumeirah Beach Residence (JBR) and Jumeirah Lakes Towers (JLT), fell by 10 to 30 percent since March this year.

Among these, the worst-hit were the doubled bedroom apartments on the Palm Jumeirah, followed by double bedrooms in International City, which fell by 23 percent.

In JBR, single bedroom rents dropped by 14 percent, while double bedrooms saw a drop of 16 percent. As for JLT, single bedroom units saw the rents drop by 19 percent, while double bedrooms saw a decline of 17 percent. The apartments in Discovery Gardens fell by 12 percent (single bedrooms) and 10 percent (Double bedrooms).

Rents in several areas of Dubai decreased considerably over the past five months, with few exceptions to this trend being noticed in few types of units in preferred developments performing well, the report added.

The rents for good quality apartments in Dubai Marina increased by 11 percent for single bedroom units, and by 6 percent for doubled bedroom units, while the triple and four bedroom villas in Arabian Ranches and triple bedroom villas on the Palm Jumeirah have gone back to the levels in March 2009 or increased marginally, the Landmark report revealed.

The CEO of Landmark Advisory, Charles Neil, said that the increasing rentals could be attributed to lack of supply, and several landlords have removed inventory from the market to avoid renting out at the prevailing market rates, while others could be out of town during summer and therefore may be unavailable.

The month of Ramadan may be another reason that affects the leasing supply, as several landlords are awaiting for the end of the year, to reassess the market, Neil pointed out.

The report emphasized that the demand for property was particularly strong during the month of June and July, as a significant amount of rental contracts end around this time. However, the marginal rent increased triggered by this is unsustainable, Landmark Adivisory report said.

Landmark predicts that several residential localities in Dubai will undergo further fluctuation, particularly with the influx of fresh supply, during the next one to two years time.

In case the rents continue to decline further in these areas, additional relocation demand may continue, as long as the landlords adapt pricing strategies. The relocation demand will help tone down any further rental declines, Neil commented.

The report indicated that relocation demand is currently continuing to drive the leasing market with continued demand from Sharjah and Abu Dhabi and from within Dubai.

A continued upgrading trend is evident with the location, quality and size, being the major factors for relocation demand, the report concludes.

Posted on 25/8/2009

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