The price of apartment rents in Dubai fell by six percent in the first half of 2016 as global and political issues hit investor and buyer confidence, a report by real estate website Bayut.com has found.
Dubai’s plummeting rental prices is double that of neighbouring Abu Dhabi, which suffered a downward dip of 3 per cent.
Studio apartments in Dubai saw the deepest shift in price, falling by 7 per cent to an average of Dhs 57,000 in the first half of 2016
Meanwhile, the average rent of 1-bed and 2-bed apartments in the emirate was calculated at Dhs 99,000 and Dhs 150,000, respectively, dropping by 4 per cent and 6 per cent.
The average rent of spacious options such as 3-bed and 4-bed apartments also fell by each in H1’15. Average annual rent for the two categories remained Dhs 205,000 and Dhs 310,000 in the first six months of the year.
Regarding property yields, studio and 1-bed apartments, being most popular housing categories, returned an average yield of 7 per cent. The 2- and 3-bed apartments kept investors engaged with yields of 6 per and 5 per cent, respectively, while the 4+ bed category returned a mere 3 per cent in rental yields in H1’ 16, Bayut found.
Larger properties took a harder hit in Abu Dhabi, where rents for studios grew by 2 per cent to an average of Dhs 63,000in the first half of 2016.
One-bed options saw a marginal drop of 1 per cent to Dhs 97,000. Meanwhile, 2-bed and 3-bed apartments averaged Dhs 136,000 and Dhs 181,000, respectively, declining by 4 per cent and 2 per cent.
The report read: “With the market moving into the second half of the year, global developments continue to weigh on the world economy. Regional security and political issues like Brexit have ushered in an era of uncertainty that is making investors and home buyers delay their spending decisions in some cases, resulting in the marginal loss of pace in vibrant real estate markets like the UAE.”
However, the report added that Expo 2020-related infrastructure developments would “remain continued drivers” for injecting capital into the real estate economy.
The report added: “Dubai and Abu Dhabi continue to be among the few rewarding realty markets in the world and will continue to do so in the near and distant future.”