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After registering growth for ten consecutive quarters, average residential rents dipped marginally by 1 per cent during the third quarter of this year, according to the Q3 2014 Dubai MarketView report by global property consulting firm CBRE.
The drop has been higher for some individual developments, while the highest falls were noted in Dubai's freehold developments. Rental rates across leasehold areas remained stable with few areas still registering an increase. Rental rates in Downtown Dubai, Tecom C and International Media Production Zone dropped by an average of 3 per cent, while Palm Jumeirah, Business Bay, International City, Jumeirah Lakes Towers, Motor City and Dubailand Residences saw rents dipping by around 2 per cent.
However, developments such as the Greens and Dubai Marina have witnessed stable rental rates during the quarter. Mat Green, Head of Research and Consultancy UAE at CBRE Middle East, says, ''The dip in rentals has been attributed to an increase in new residential stock and weaker demand during the traditionally slow holiday period.''
On a year-on-year basis, average villa rents have witnessed a single digit growth of around 8 per cent. However, the notable rise in new villa stock over the past 18 months has restricted rental inflation within the segment.
''Smaller villas with two or three bedrooms, which are popular among new job takers, registered an increase of 12 per cent and 11 per cent, while five- and six bedroom villas registered modest single-digit growth. During the same period seven-bedroom villas witnessed a similar marginal increase of around 3 per cent,'' said Green. According to the report, while the rental market experienced a slight blip in performance, the sales market maintained some momentum, albeit at a slower rate compared to previous quarters. Overall, average sales prices increased by around 3 per cent quarter-on-quarter, bringing annual growth close to 23 per cent.
The best-performing segment during the quarter was high-end apartments, a trend that was also visible in buying patterns in prime areas such as Dubai Marina and Palm Jumeirah.
In the short term, around 19,000 new units are expected to be available next year, with about 29 per cent in the Dubailand development. New supply should help check rent inflation, controlling the spiralling cost of living.
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Source: Property Weekly