REPORT: Thousands of new units will push Dubai rentals down further
We’ve seen multiple reports lately saying that Dubai rental prices are continuing to fall, and it seems as though they could be about to fall further. According to Asteco the price drop will continue in the second quarter of 2017, largely due to the thousands of new units that will be completed.
According to the Asteco report, rents have dropped by 2 percent quarter-on-quarter. This year Dubai is expected to have 17,700 new units, compared to 8,750 last year. Furthermore the report claims that many units are being offered at discounted rates to encourage sales.
The increase in available apartments and villas is likely to decrease rents further.
“Market conditions have served to strengthen the negotiating position of many residential and commercial tenants. Many existing tenants have taken this opportunity to renegotiate their lease terms [on expiry of contracts], or when faced with intransigent landlords, opted to relocate in search of more attractive terms,” said John Stevens, Managing Director, Asteco.
Villa rentals have also seen a decline in price in the second quarter, with Palm Jumeirah and Arabian Ranches dropping by 13 percent and the Springs by 16 percent. Jumeirah has seen prices cut by 14 percent.
Similarly, a recent report from Propertyfinder found that rental values have dropped in both Dubai and Abu Dhabi. 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.
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. There are a number of elements at play [including] high levels of construction in the lead up to 2020.”