Dubai rents continue to fall
Downward pressure on rents is predicted to continue into the first quarter, 2011.
June 14, 2010 4:54 by Katherine Azmeh
Dubai’s residential and commercial rents continue to decline, according to the June 2010 Dubai Leasing Guide from Landmark Advisory, real estate consultancy company. Rental data was compiled from transaction information, along with shopper and broker surveys.
According to the data, lease rates have continued to fall across Dubai, for both residential and commercial units. Lease space in lower quality buildings and less prestigious locations showed the steepest rent declines, but the report contends that the more significant trend is the resumption in rent declines for high quality units in prestigious locations.
Tenants have greater leverage in a market characterized by oversupply in the pipeline and are seeking more value for their lease money, explained Jesse Downs, Director of Research & Advisory Services at Landmark. She said the trend towards more bargaining power by tenants is “now [being]observed in high quality units in prestigious locations, which is a segment that has experienced relatively minimal volatility in late 2009 and the first quarter of 2010 due to relocation trends.”
The downward pressure on rents is expected to continue, “especially in Q4 2010 and Q1 2011,” Downs said.
Residential rents are down an estimated 6-10 percent for 1 bedrooms in Palm Jumeirah and JLT, compared to the previous lease guide. In International City, declines of 12 to 22 percent were noted.
Steep declines in commercial rents were also noted. “DIFC lease rates lower limit has decreased by 17%, commercial units in Business Bay have decreased 6% and Dubai Silicon Oasis has decreased 20%,” the report said.