Rental prices in Dubai on steady decline
A new report by the Propertyfinder Group suggests that rent in Dubai and Abu Dhabi has been on a steady six month decline.
The study conducted on 23 neighbourhoods in Dubai between September 2016 and March 2017 found that the sale price had dropped in 17 districts while rental values declined in 21 of the surveyed areas.
Downtown Dubai experienced the greatest decline at 6.7 percent and, while it now costs an average of AED2,182 per square foot, the bustling district remains the most expensive area to buy property.
At 3.6 percent and 3.5 percent , IMPZ and Dubailand also experienced a significant price drop.
The report also found that the rental value of apartments has fallen by a greater margin than sales prices in most areas, which suggests that landlords are becoming more willing to reduce the prices.
Speaking on the decline, Propertyfinder’s chief commercial officer, Lukman Hajje said: “The report confirms what most have suspected; prices continue to ease, both in sales and rentals across most communities in the UAE.”
He added: “There are a number of elements at play; high levels of construction in the lead up to 2020 increasing supply and competition for buyers and renters; a new reality of oil prices at US$50 per barrel, a historically strong dollar making UAE property comparatively more expensive despite the declines, and a historically low GBP and Euro encouraging British and European owners to liquidate their UAE property holdings to realise currency profits."
With regards to Abu Dhabi, the report found that the sales price of villas in six of the eight districts surveyed experienced a drop. This, includes an 11.8 percent decline in Al Raha Gardens.
The report also found that the overall rental rate of villas and apartments experienced a decline.
“Rents continue to decline in Abu Dhabi where a reduction in government spending in direct correlation to sluggish oil prices has reduced employment and demand for housing in the capital,” the report read.
Propertyfinder’s results coincide with that found by property management company Asteco just last month.
Asteco's report found that over the first quarter of 2017, the average rent fell three percent. It also found that prices have dropped by eight percent over the past 12 months.
According to Asteco’s findings, tenants are becoming more conscious of the market and using their findings to either relocate or negotiate a better deal with their landlord.
Most of the more significant rental declines are in higher-end properties such as Downtown Dubai, Dubai Marina, Business Bay and Palm Jumeriah.