Rents in Dubai: the latest research
Rents keep falling, according to the headlines. But what are the details behind the latest real estate research? Read on to find out.
June 15, 2010 5:06 by Sam Potter
Landmark Advisory has released its latest guide to leasing in Dubai. The company, a division of Landmark Properties, combined transactional data with broker surveys and mystery shopping to prepare the research. Landmark published its last guide in April 2010, just a couple of months ago. Surely they can’t have observed much change in that time?
Apparently, they can. “The latest guide shows that lease rates have continued to decline across Dubai irrespective of quality and location, for both residential apartments and commercial units,” says the press release accompanying the report.
Unsurprisingly, the units in lower quality buildings or less prestigious locations are experiencing the strongest drop, but “the more significant trend is the resumption in rent declines for high quality units in prestigious locations.”
“Unlike the trends in April 2010, where the rental declines were primarily restricted to lower and medium quality buildings, high quality buildings in good locations are also seeing rental drops,” explains Ms. Jesse Downs, Director of Research & Advisory Services, Landmark Advisory. “While the falls are still marginal when compared to the drops in lower quality buildings, this is still a significant trend.”
The company puts declines down to increasing supply, a trend that is set to continue.
So what’s the detail? For apartments, a one bedroom on the Palm Jumeirah will cost you 6 percent less than in April, while in JLT a similar sized apartment has dropped 10 percent. In lower quality areas such as International City, studio lower limits decreased 12 percent, while upper limits for both studio’s and one beds decreased on average by a huge 22 percent. The lower limit of lower quality two bed apartments in both West and East Dubai have also declined by an average of 7 percent since early May.
Downtown Dubai, one of the more desirable addresses, has seen further drops in rent thanks to new supply entering the market in neighboring areas. “While these areas are not of comparable quality to Downtown Dubai, the impact on this increased supply is evident,” says Downs. Lower limits for two beds in Downtown Dubai have dropped 5 percent. At the same time the lower limits in Business Bay and Sheikh Zayed Road – those neighboring areas – have fallen by 12 percent and 6 percent respectively.
According to the report, villa lease ranges have been much more stable then apartment rates, though some areas are still experiencing declines. Areas including Arabian Ranches, Victory Heights, Jumeirah Islands, The Springs, Dubai Silicon Oasis, sections of the Lakes and parts of Palm Jumeirah have all seen lower limit declines.
The largest declines occurred in the lower limits of five bed villas, says the guide. In Jumeirah Islands and Dubai Silicon Oasis, five bedroom villas declined by 7 percent and 13 percent respectively. For two beds, lower limits in The Springs declined 6 percent (with rents as low as 75,000 AED) while in Victory Heights, Palm Jumeirah, and Dubai Silicon Oasis the three bed lower limits declined by an average of 6 percent.