Rents for luxury Dubai properties fell by 0.6% in the first three months of the year, marking the first drop since mid-2011, according to Knight Frank.
The decline was in line with trends in the UAE’s wider non-oil economy, which “grew at a notably weaker pace in the first quarter of 2015”, the UK estate agency said.
“This is likely to have hit confidence, and thus tenant demand for luxury residential properties in the emirate,” it said.
The fall in Dubai luxury rents came as the Knight Frank Prime Global Rental Index edged up by 1.3% in the year to March, its slowest rate of growth since the first quarter of 2010.
“A year ago prime rents globally were rising on average by 3.5% per annum but the global average has now slipped to 1.3%,” said Kate Everett-Allen, partner in Knight Frank’s Residential Research department.
A year ago, Dubai was seeing double-digit increases in luxury property rents. But the drop in prices during the first quarter is part of a wider cooling of the Dubai property market.
Knight Frank said in June that Dubai property sales prices were down by 6.1% in the first quarter of 2015 compared with the same period last year, ranking it among the world’s worst-performing markets.
Sales prices are set to fall by a further 10% to 20% by early 2016 as the market correction continues, according to global ratings agency Standard & Poor’s (S&P).