Monthly rent decline hits 1.3% in May and further drops are expected, says Phidar Advisory
Dubai residential rents are set to fall further, dragging down sale prices with them, according to a research note by the Phidar Advisory.
The firm’s Q2 mid-quarter report shows both residential and office rents declined in the first three months of 2016.
Jesse Downs, Managing Director of Phidar Advisory, said the trend is set to continue despite other forecasts that the market has bottomed out.
“Talk of a house price floor is entering the media again, yet our research indicates rent declines are accelerating and will likely continue through the summer,” she said. “This will inevitably pull sale prices down.”
Phidar Advisory said rents peaked in May 2014, with a “gradual” average monthly decline averaging at 0.3% since then. But the declines accelerated to 1.3% in May and 4.1% in early June.
“This is a significant shift in rent trends… and is an indicator the housing market is about to get significantly more affordable,” said Downs.
There is a 21% vacancy rate in the office market, although a shortfall in premium commercial space, Phidar said. Gross lease rates and sale prices declined 4.6% and 7.3% quarter-on-quarter, respectively.