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Dubai Rents Decline
As reports of further rent declines emerge, Kipp takes a look at recent developments in the real estate arena
November 4, 2010 12:26 by Eva Fernandes
Kipp remembers the days when property developers broadcast their ads (read: intricate CGI artists’ impressions) on international television in every ad break. That was when it wasn’t uncommon for a Dubai landlord to expect payment for the lease of a Dh.125, 000 studio flat all at one time. For tenants, one of the few silver linings of the big black cloud that is the recession has been the significant drop in real estate – which has been further exacerbated by the completion of a significant number of housing units. Kipp takes a brief look at recent developments in the realm of real estate.
Landlords slashing rents
As a new supply of completed units enters the real estate market, Khaleej Times reports that landlords are slashing rents by up to 20 or 30 percent. As supply increases, vacancy rates in the Emirate are on the decline. Jesse Downs, director of research and advisory at Landmark Advisory said in a recently released report, ‘We estimate that average vacancy rates in Dubai are currently 15-18 percent but will increase to 19-24 percent by 2010. Even considering the Abu Dhabi commuter demand, it is clear that average rents in Dubai will continue on a downward trajectory.’
Unsurprisingly, the areas that are worst hit by the rental declines are new developments in Dubai Marina, Jumeriah Lake Towers and The Views. For instance, the rent for a two bedroom flat in Dubai Marina has declined by 27 percent with studios in International City dropping by a considerable 38 percent (from Dh22,000 a year to a significantly lower Dh16,000 a year, says Khaleej Times [Editor’s note: We know that’s 27 percent; we assume KT means “up to 38 percent”]).
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