Is your Dubai rent about to get cheaper?
Over the last six months there have been numerous reports that the rental value of properties in Dubai is decreasing. According to one report from Reidin, flat rents fell by 5.4 per cent in February 2016 in compared to a year ago. Prices for villas also dropped, by 5.7 per cent, over the same period.
Reidin also rolls out a rental price index for Dubai and Abu Dhabi. That shows a drop of 0.9 points in February, from 99.3 to 99.4. And it’s expected to get even cheaper, as 2,200 residential units have been added to the market so far this year.
The Q1 2016 Residential report by Core Savills said that both buying prices and rental values will decrease over the next 12 months due to the decline in oil prices and the quantity of new homes being built.
“This has very much been a self-fulfilling prophecy until now where most investors believe the market should see another six months of price declines, which in itself has translated and still translates into more downward pressure,” Core Savills CEO David Godchaux said in a press statement.
However, property experts are predicting that rents will bottom out later this year, meaning that it’s unlikely that we’ll continue to see the same decline in price.
David Godchaux added: “Reversely, we are now witnessing a growing pool forming of investors and renters who are anticipating a balance in price and increase by the end of 2016, which is a strong stabilising factor, as many have shown they are ready to transact now if they believe that the price is right.”
This correlates with many residents who say that their rent has actually increased year-on-year, meaning that tenants are not making a saving on rent.
If your landlord doesn’t give you a good deal when your lease is up, it could be time to shop around. Even though the rental drops represent Dubai as a whole, it looks like drops are being experienced even in prime locations such as the Palm Jumeirah and Dubai Marina. Meanwhile, villa prices in popular areas such as Umm Suqeim continue to slip, especially with several new developments coming to the market. Many landlords are now also offering over 10 per cent discounts for less cheques.