Report links redundancies to price drops
Redundancies among professionals is among the reasons Dubai’s rental sector saw the largest quarterly decline for five years, according to a new report.
Real estate consultancy Cluttons recorded a 2.7 per cent drop in the first three months of this year, compared with the same period in 2015.
Apartments registered a fall of 4.1 per cent while villa rents fell by 1.8 per cent.
The drop is only seen when tenants - who are locked into their contracts - come to renew.
Faisal Durrani, Head of Research, said: “It is our view that an overall decline of around five per cent on average is likely within 2016.
“Weaker economic conditions have hampered the rate of overall job creation which is trimming the normally robust stream of tenants, causing a drop in rents.
According to the report, “Weakness in the global economy is translating into a rising number of redundancies in the finance and By Mahak Mannan banking sector - which is a critical source of credit for tenants.”
Last week, Morgan McKinley reported job vacancies in the UAE dropped 12 per cent in the first quarter of 2016, compared with 2015, concluding: “It’s a tough market out there.”
Durrani added: “The top end of the property spectrum including the Burj district, Dubai Marina, Palm Jumeirah and DIFC will see more significant corrections of five to seven per cent.”
Furthermore, the benefit on job creation from Expo 2020 is not expected until about 2018, the report claimed, though it will have a positive impact when it arrives. During 2016, Cluttons expects 7,058 new properties to be completed, followed by a further 10,299 in 2017.
BIG CITY LIVING: Dubai Marina has both mid-priced and high-end rent options, the report stated