New stock peg back villa rental rates

Villa market becoming increasingly tenant driven with landlords offering more flexible rental termsImage Credit: Supplied

The entry of new stock in the market has helped bring down the rental rates of villas in Dubai. Asteco’s report on real estate trends for the second quarter of 2015 has revealed that lease rates of villas have declined by 2 per cent this quarter and fell by 5 per cent compared to Q2 2014.

Rental rates in Arabian Ranches were down by 7 per cent from Q1 2015, which is being attributed to the handover of Casa villas in the last few months. The addition of these 197 villas in the market has put pressure on the landlords to reduce their prices. The annual rent of a four-bedroom villa in Arabian Ranches ranges from Dh190,000 to Dh300,000, while rent for a five-bedroom villa is estimated at around Dh255,000 to Dh365,000.

The script is similar in Dubailand where handover of Mudon’s new three- and four-bedroom townhouses have forced the prices of villas to come down in the vicinity. The rental price points of townhouses in Mudon range from Dh175,000 to Dh210,000.

The villa market is becoming increasingly tenant driven where landlords are willing to accept more flexible rental terms to prevent their units from remaining vacant. Market experts have noticed that landlords are willing to accept rents in several installments, a departure from the trend of accepting just one or two cheques.

The current pressure on the landlords is expected to continue throughout the year as more supply is expected to enter the market, especially in Dubailand.

Cavendish Maxwell’s Q2 2015 study on real estate prices suggests rents of villas in The Springs, Jumeirah Village Triangle (JVT) and Jumeirah Islands have remained largely unchanged.

In terms of sale prices, buyers’ interest seems to be shifting to smaller and affordable properties. According to Cavendish Maxwell’s report, despite a steady performance on the rental front, sales prices in The Springs have come down by around 16 per cent in the last 12 months. New villa locations such as JVT, Green Community at Dubai Investments Park and Al Furjan have emerged as popular destinations for those looking to buy villas.

Handy Hints:

* Rents in Arabian Ranches were down by 7 per cent during the first quarter

* Arabian Ranches and Dubailand among developments with new villa stock

* Rents in The Springs, Jumeirah Village Triangle, Jumeirah Islands unchanged

Source: S. Dhar, Special to Properties

The writer is a freelancer


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