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Dubai rents: the predicament and the predictions
As the region is battered by the financial storm, investment houses and research firms have been churning out reports about the property market in Dubai.
April 16, 2009 3:43 by Aarti Nagraj
Rental rates in Dubai have become one of the favorite topics of research for firms in the region, and while most agree that they are falling, the numbers vary from one report to another. Here’s a selection:
1. Property consultancy firm Asteco has just released the Dubai Report, according to which apartment and villa rents in the emirate have fallen by 22 and 34 percent respectively in the first quarter of 2009, as compared to the prices in the fourth quarter of 2008.
It also says that the biggest apartment rental drops seen were in Palm Jumeirah, Al Barsha, Bur Dubai and Discovery Gardens, where average rents were around 30 percent lower than in the fourth quarter of 2008. The largest decrease in villa rents was reported in Springs and Jumeirah Island, at 41 percent.
2. Another report, released by investment firm EFG-Hermes late last month, said that the rents in Dubai could fall by between 20 to 50 percent in 2009 as compared to 2008, depending on the location of the building.
3. Dubai’s Real Estate Regulatory Authority (Rera) will be releasing the new rental index later this month; in the meantime it has announced that the report shows an average rent drop of 10 to 15 percent. However, Marwan Bin Galita, CEO of Rera, clarified to Gulf News that the rates only referred to certain communities.
4. Earlier this year, a report by Global Investment House said that rents in Dubai would decline by 15 to 25 percent in 2009, due to the “lack of demand in line with the economic slowdown, which has forced many firms to downsize or halt their expansion plans, which will likely result in a decline in the number of expatriates in Dubai.”
5. According to the March House View on MENA real estate, published by global real estate company Jones Lang LaSalle, vacant spaces in Dubai exceed 15 percent, resulting in rents halving in some locations.
“Landlords have come to recognize the value of their tenant’s covenant, and are now becoming more accommodating of tenants’ needs for lower costs, better facilities and long-term leases,” says the report.
6. At the March seminar, “Selling in a difficult market,” conducted by US-based property consultant Judy LaDeur, brokers taking part said that rents in some areas of New Dubai and Al Ghusais had fallen by up to 40 percent. A flat that rented for AED120,000 last year in Ghusais is now available for AED70,000, one of the brokers said – a discount of more than 40 percent.