Residential rents in Dubai declined by 3 per cent quarter-on-quarter during the second quarter of 2015, according to the latest report from ADIB and MPM Properties.
The drop in rents was attributed to a surge in supply, as 6,750 new residential units were delivered during the quarter. The total Dubai residential stock reached 479,000 units by end-Q2.
The majority of the new supply was added along the Sheikh Mohammed Bin Zayed road, with the International Media Production Zone area accounting for 26 per cent of the total supply.
Dubai’s property market has been reporting flat growth in rents this year following a sharp rise in rates over the last three years.
A recent report by Core Savillis noted that apartment rents in Dubai shot up by 17 per cent in 2012, 26 per cent in 2013 and 15 per cent in 2014. Meanwhile villa rental prices rose 18 per cent, 17 per cent and 9 per cent respectively in the last three years.
It added that apartment rents in the emirate are expected to decline 3 to 4 per cent this year while villa rents are set to fall marginally by 1 to 2 per cent.
“These figures are significant because even though the drop is minor, it represents a turning point where renters can breathe a sigh of relief as they are unlikely to see their rents shoot up as they have done over recent years,” the Core Savillis report said.
In terms of sales prices, values for completed apartment units fell 3.5 per cent quarter-on- quarter in Q2, the ADIB report found.
Averages sale prices in Business Bay witnessed the biggest fall of 5 per cent.
Experts predict that residential prices in the emirate will continue to drop until early or mid-2016 before recovering in 2017, in anticipation of Expo 2020.
But they also assert that the drop in rates is unlikely to dampen investor interest as many of Dubai’s properties still provide high yields.