Prime areas recorded the highest decline in apartment rents, with Sheikh Zayed Road seeing a 7% drop, says Asteco
Rents in Dubai fell by an average of 2% in the second quarter compared to the first three months of the year, with marked declines at the upper end of the market, an Asteco report shows.
Villa rents dropped 5% year-on-year in Q2, the real estate firm said in a statement. Homes for sale also saw an average fall in prices of 2%, with some areas performing significantly worse than others.
“The softening in Dubai’s residential rental markets appeared earlier than we originally anticipated, offering tenants in the emirate an opportunity to recoup somewhat after several tough years of high rents,” said John Stevens, managing director at Asteco.
“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,” he added.
Prime areas of Dubai recorded the highest quarter-on-quarter decline in apartment rents, with Sheikh Zayed Road seeing a 7% fall, Palm Jumeirah 6%, while Jumeirah Beach Residence units witnessed a 7% drop.
Conversely, mid-market areas like IMPZ, Dubai Sports City and Dubai Silicon Oasis recorded higher rents compared with 2014, up 6-13%. This was attributed to the completion of community infrastructure and increased occupancy levels, making them popular among tenants.
In the villa segment, the handover of projects like Casa Villas at Arabian Ranches brought rents in the area down by 7% quarter-on-quarter, and 15% year-on-year, Asteco said in its report.
“We even saw a 6% decline for Palm Jumeirah, with the handover of the lower specification Palma Residences’ townhouses impacting rental rates due to their lower price band. So we are seeing a similar tenant-friendly trend in the broader villa market, with more flexible installment plans for example, and this is set to continue as areas like Dubailand continue to deliver new supply,” Stevens noted.