Pressure on Dubai rents set to continue
House rents in Dubai decreased only marginally in the first quarter of 2017, but analysts expect rates to see growth towards the year end.
According to Chestertons, house rents dropped marginally in Q1. While average apartment rents dropped by one per cent across Dubai, properties in DIFC bucked the trend with a four per cent increase compared to Q4 2016. In Dubailand, rents fell by almost four per cent, with similar drops experienced in Jumeirah Lakes Towers and Remraam.
Villa rents also fell by one per cent, with villas in Victory Heights (eight per cent) and The Springs (six per cent) experiencing the greatest drops. The Lakes saw rents increase by almost six per cent.
In terms of supply, Core Savills estimated 3,100 units were delivered in Q1 2017 while Cavendish Maxwell said 2,500 residential units have been handed over. Nearly 88 per cent of the units handed over in Q1 were apartments in areas such as Jumeirah Village Circle, Sports City, Silicon Oasis, Dubailand, among others.
A further 28,000 units are currently under construction in Dubai and scheduled for delivery by the end of 2017. Actual completions are likely to be far less. Assuming a materialisation rate of 50 per cent, around 14,000 homes could be delivered.
There is expected to be a downward pressure on Dubai rents for the near future.
Citing reasons, Mario Volpi, chief sales officer, Kensington Exclusive Properties, said: “There are many properties scheduled for handover this year that will give many options for tenants. Mira in Arabian Ranches 2, for example, is handing over now and offering 3-bedroom + study for Dh115,000.
Many people have lost their jobs, so there has been some migration to smaller properties and/ or leaving Dubai altogether.”
Sanjay Chimnani, managing director of Raine & Horne Dubai, said Dubai rents in the category of Dh170,000+ have been seeing the biggest drops in the past 18 months while the market below Dh80,000 has not seen much movement. “We believe there may be some more correction till the last quarter of 2017. From the fourth quarter of this year, we will see rents stabilise. The soon-tobe-implemented modification to the rental disputes law may have a positive impact on rents for quality properties as this segregates different assets in the same area,” Chimnani added.
“Dubai rents are approaching what tenants perceive to be good value and this will continue for a little longer. Depending upon project handovers, rents will vary. If the handovers are on time, then demand and supply will be affected. There will be more units available for rent, as compared to the number of tenants seeking homes. However, if the handovers are not on time, there might be an increase in demand for homes, which may lead to increase in rent or continue along the same line,” said Imrann Nawab, head of sales at SPF Realty.