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Dubai: Dubai’s budget conscious tenants are having no respite as mid-market locations such as Silicon Oasis, Discovery Gardens and Karama record rental growth over and above those witnessed in the more upmarket parts of the city in the first three months.
This has been brought on as more residents choose to relocate to these “affordable” locations and thus forcing up the rentals. “Whilst more widespread rental deflation is anticipated during the course of 2015, mid-market offerings are expected to remain in favour,” said Matthew Green, Head of Research and Consultancy at CBRE. “Occupiers [are] driven towards secondary locations as the cost of living has spiralled over the past two years.”
Apartments at Jumeirah Lakes Towers also experienced gains during lease renewals, while locations such as IMPZ, Motor City, Liwan, Al Barsha and Al Nahda recorded declines, according to CBRE estimates.
At the citywide level, the rental fluctuations during the first quarter was estimated from -1 per cent to 3 per cent. By now, most landlords across Dubai have raised their rental demands to be in line — or in many instances well above — the index put out by the Dubai Land Department.
According to Green, most of the big increases took place during the first-half of last year, for instance up by 27 per cent during Q-2014. “The residential leasing market has remained broadly stable for a third consecutive quarter,” Green said.
Exception to the rule
That could also be bringing in changes in the way landlords interact with tenants — some of them are offering incentives such as rent-free stay for a month, “as well as offering semi-furnished units at the normal apartment rate”, according to a CBRE report on the status of Dubai’s property market during the first quarter. But such instances of landlords’ largesse are more the exception than the rule.
But even if only a handful is doing so, it is still the first time in years that they have forced to offer such incentives. The last time was during the crisis years of 2009-11, when Dubai’s landlords were willing to take multiple cheques and offer extended rent-free stays to ensure they had some income coming via their property.
As for the present, there are still no indications that additional supply of homes is bringing down rents by a significant margin across Dubai. An estimated 16,000 apartments and villas were added to the existing stock last year.
In fact, what has happened is “emergence of new supply and traffic related issues has led to drop in rental rates in a few residential districts while other developments with improved infrastructure and retail facilities maintained healthy rental rates”, the CBRE report finds.
Source: Manoj Nair, Associate Editor