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Dubai's residential tenants looking for a bargain on rents are better off opting for apartments in Business Bay or Sports City, which have seen dips by 3 per cent and 2 per cent respectively in the third quarter. Elsewhere in the city's key freehold locations, rentals remained steadfastly stable, according to estimates by the valuation consultancy Cavendish Maxwell.
The relative drop in Business Bay and Sports City could be due to more deliveries taking place, particularly at the latter development. But the wide-ranging rental softness that many tenants have been hoping for is yet to materialise.
Upscale locations such as Downtown Burj Khalifa command Dh110,000-Dh125,000 for a one-bedroom apartment, while at the Views of Greens, these would be Dh95,000-Dh110,000. Unless there is a drastic reordering of the rental trends, those areas with limited new supply emerging from the pipeline — those like Dubai Marina, Jumeirah Lakes Towers and Downtown Burj Khalifa — will continue to maintain current levels.
Elsewhere in the city, the first three quarters delivered an estimated 6,000 new homes, based on Cavendish Maxwell projections. Those hoping for a relocation on better lease terms should look to Sports City, Dubailand, International City, Jumeirah Golf Estates and Jumeirah Village Circle, which was where many of the new deliveries took place.
Over 70 per cent of the completed developments in 2015 have been apartments. In the villa and town houses category, rents ''declined on average by 1 per cent in the Meadows, Springs and Lakes'', the report states.
''In locations such as Victory Heights and Jumeirah Park, rents have dropped by up to 3 per cent in Q3-2015 from the previous quarter.
''There were approximately 18,000 residential units scheduled to enter the market in 2015... We have seen many developments initially scheduled to be completed at the end of 2015, delayed to the first half of 2016 or to a later date in 2017,'' the report notes. ''Additional supply entering the market could place further pressure on prices to the end of 2015 and through 2016. Factors such as the estimated population and job growth leading to the year 2020, alongside the UAE's initiatives to encourage investment, should help support the absorption of this upcoming supply.''
On the sales side, apartment price drops maintained the same pace in the third quarter as was recorded in the second, at locations such as Dubai Marina, the Greens and Views, Jumeirah Beach Residence and International City. The speed of decline accelerated in Sports City and Motor City.
''Prices in secondary locations such as International City, Motor City and Discovery Gardens have declined the most at 10, 10 and 9 per cent respectively over a 12-month period from Q3-2014. In the more central and established areas, prices have dropped between 4 and 5 per cent during the same period.''
According to the consultancy, buyer inquires ''continued to decrease (in the third quarter) whilst seller instructions increased. The number of agreed sales, however, has remained the same.''
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Source: Manoj Nair, Associate Editor, gulfnews.com