Looking for a bargain? Rent a one-bed flat in Dubai

DUBAI // Tenants in Dubai paid lower rents last year and housing costs will fall even further this year, the latest property survey suggests.

The biggest bargains are on one-bedroom flats, with annual rents in most areas down by between Dh5,000 and Dh15,000 in 2016, the broker Asteco said.

Rents for one- bedroom flats in Jumeirah Lakes Towers fell by 16.6 per cent to Dh75,000, in International City by 10 per cent to Dh45,000, in Jumeirah Beach Residence by 8.6 per cent to Dh105,000, in Business Bay by 8.6 per cent to Dh85,000, in Dubai Marina by 8.1 per cent to Dh90,000 and in DIFC by 7 per cent to Dh105,000.

There were no rent reductions in Downtown Dubai (Dh115,000) The Greens (Dh95,000) or Al Barsha (Dh75,000). Overall, apartment rents fell by 5 per cent in the final three months of 2016, and ended the year 6 per cent lower than at the start.

Asteco said more than 40,000 new homes were due on the market, forcing rents down even more and putting tenants in a strong bargaining position.

“Tenants will be offered a significant choice of completed properties in 2017 in both established and new communities,” said John Stevens, Asteco managing director.

“The additional supply will continue to put downwards pressure on market rates, which will place the negotiating power firmly in the hands of tenants, despite a forecast increase in population.”

Villa rents fell by 3 per cent in the last three months of 2016 and by 5 per cent over the year. Biggest falls were in Al Barsha, with three-bedroom villas down 17.8 per cent to Dh175,000 and in The Meadows, down 9.8 per cent to Dh210,000.

They were unchanged in Jumeirah (Dh190,000), Jumeirah Village (Dh160,000) and The Springs (Dh180,000).

Last year, said Mr Stevens, “landlords, especially corporates, offered incentives such as increasing the number of cheques accepted and longer rent-free periods to entice takeup, especially in newly handed over communities that still lack supporting infrastructure, retail and leisure facilities.

“Single-unit owners, especially those with mortgages, were more inclined to reduce rents to increase take-up, rather than undergo prolonged periods without any rental income.”

Developers across the city plan to complete another 31,500 apartments and 12,500 villas and town houses this year, although Mr Stevens said some of the new homes may not be delivered on time. Asteco calculated 8,750 apartments and 5,000 villas were completed last year.

Average house sale prices in Dubai remained flat during the final quarter of last year, which the broker said signalled “the bottoming out of the market”.

Average prices fell 13.6 per cent in Downtown Dubai to Dh1,900 asquare foot.

In Dubai Marina they slipped 9.3 per cent to Dh1,450 a square foot, while in JBR prices dropped 5 per cent to Dh1,300 a square foot.

Prices rose 7.4 per cent in Business Bay to Dh1,300 per square foot, and 2.9 per cent in DIFC to Dh1,750 a square foot. In International City sales prices increased 1.7 per cent to Dh700 a square foot.

Mr Stevens said market sentiment was expected to improve with increased government spending on infrastructure, hospitality and retail projects. This would have a positive effect on demand for property in Dubai.

In general, brokers are divided on whether the Dubai market will pick up this year after two years of falling prices.

Optimists say Dubai Government infrastructure spending on Expo 2020 is likely to boost job numbers and economic growth this year, pushing house prices up.

At the end of last year, proper- ty broker Core Savills noted an increase in sale prices in some of Dubai’s lower to mid-market submarkets.

In November, property broker JLL and website Dubizzle predicted that Dubai house prices would start to rise. Consultancy Knight Frank predicted “a gradual recovery” as the market rebounded and investors regained confidence.

Phidar, however, predicted further price falls because of the strong US dollar, an expected increase in interest rates and slow economic growth.

Cluttons did not expect any increase until the end of the year.