High-end residential locations in Dubai such as Palm Jumeirah and Jumeirah Beach Residences have seen rents drop between 6 to 7 per cent quarter-on-quarter in Q2 2015, a new report shows.
According to the latest report by Asteco, apartment rents saw the biggest quarter-on-quarter decline in Sheikh Zayed Road and Jumeirah Beach Residences. Rental rates fell by 7 per cent in Q2 2015 in both the areas.
Meanwhile Palm Jumeirah rents saw a quarterly drop of 6 per cent. Overall, apartment rental rates in Dubai fell marginally by 2 per cent in Q2 2015.
Dubai’s affordable locations such as International Media Production Zone, Dubai Sports City and Dubai Silicon Oasis saw rental rates rise by 6 to 13 per cent year -on-year. The report attributed the growth in rents to the completion of community infrastructure and increased occupancy levels.
Meanwhile villa rents in Dubai saw a quarterly drop of 7 per cent and a yearly decline of 15 per cent as more supply flooded the market this year, Asteco said.
“The softening in Dubai’s residential rental market appeared earlier than we originally anticipated, offering tenants in the emirate an opportunity to recoup somewhat after several tough years of high rents, ” said Asteco’s managing director John Stevens.
The report also found that property prices in the emirate fell 2 per cent in Q2 2015 with apartment prices down by 7 per cent year-on-year and villa prices dropping 11 per cent.
“The decrease was felt throughout the market and areas with a significant amount of completed new supply were the most affected. Additionally, some buyers of nearly completed buildings were keen to sell at negative premiums due to the imminent completion of the building, which required final payment,” said Stevens.
The report also noted that both rents and property prices will continue to decline further this year due to more supply coming into the market.
Rents could drop by at least 4 per cent this year in Dubai, a recent study by real estate firm Core Savillis showed. But the drop in rents is disproportionate to the rapid growth in rents that were seen over the last two years.
The study showed that apartment rents in Dubai shot up by 17 per cent in 2012, 26 per cent in 2013 and 15 per cent in 2014. Villa rental prices rose 18 per cent, 17 per cent and 9 per cent respectively in the last three years.