Uptick in home rents by year end

Residents in Dubai and Abu Dhabi continue to enjoy low rates triggered by stagnation

dubai — Residents in the UAE have been benefiting from cheaper rents over the past 12 months, and though rents are continuing to decrease marginally, they are expected to pick up again by year-end.

In Abu Dhabi, apartment rents dropped eight per cent over the last 12 months — with a three per cent quarter-on-quarter decline in Q1 this year.

And in Dubai, residential rents dipped one per cent quarter-on-quarter during January to March this year.

According to several real estate experts Khaleej Times spoke to, this trend has been witnessed due to several factors. In Dubai, an increase in the number of avail- able homes has been a huge game-changer for the rental market, and in both Abu Dhabi and Dubai, luxury rents have been directly impacted as companies are cutting housing budgets.

Cluttons — a property consultant and estate agents in Dubai — estimated that the average rents across the city dropped 9.9 per cent last year as “the rate of creation of senior level executive positions has fallen”.

And as a result, tenants have been able to negotiate terms downwards on rental renewal, with landlords feeling strongarmed into offering more flexibility on multiple cheque payments.

However, things are expected to change. Most experts forecast a potential increase in rents in 2018 when the employment market picks up and brings new occupier demand in the run-up to Expo 2020.

Different dynamics govern the two markets of Dubai and Abu Dhbai. While Dubai rents have been hit by regional economic stagnation, redundancies, weak job growth and a modest supply growth, the Abu Dhabi housing market is feeling the pinch of weak public sector spend, low oil prices and new supply. Rents are also set to fall in both emirates.