Remember... Studio in Dubai for Dh9,500 a year

Rents for apartments in Deira, the old Dubai, have risen by nearly five times in last three decades, a report by Asteco reveals.

The property consultancy said annual rents for studio and three-bed units stood at Dh9,500 and Dh25,000, respectively, in 1986, which in 2014 rose to Dh45,000 and Dh135,000, respectively.

The report, which tracks the evolution of Dubai’s real estate sector from 1985, was issued as the consultancy celebrates 30 years of operation in the emirate.

In 1985, oil was $32 per a barrel, (in 1986 it fell to less than $11) the average cost of a family car was $9,000 (Dh33,000) and the average wage in the US was $22,000 (Dh80,750) per annum.

Between 1985 and 1995 there was little, if any, change in rental rates in the emirate, but in 1996 it gradually started to increase with studio units costing on average of over Dh14,000 a year and three-beds priced at an average of Dh28,000.

However in 1998 the Asian financial crisis, declining oil prices (a barrel was $17) and the bursting of the dot.com bubble later in the same year, all took their toll,” company Managing Director John Stevens said in a statement.

In 2000, annual rents for studio and three-bed units averaged Dh16,500 and Dh34,000, respectively. The 9/11 tragedy in 2001 led to decline in studio rents 1995 levels, but started off a regional economic upturn built on rapidly recovering oil prices.

A resurgent economy with new projects, companies, free zones, and mega-developments fuelled rent increases. In 2005, studio rents average Dh17,000 per annum (pa) and three-beds at Dh41,000 pa.

As price of oil peaked to $147 in 2006-2007 and Dubai’s growth soared, rent for studios reached more than Dh36,000 – almost Dh17,500 more than the previous year.

But the boom in studio apartment rents wasn’t to last for long as new supplies of studios and affordable apartments in new Dubai areas such as Discovery Gardens and International City impacted Deira.

In Q4 2008, the global recession finally caught up with the region, oil prices tumbled and the Dubai property bubble burst as prices plunged by up to 70 per cent in “extreme” cases and the credit crunch ensued, the report said.

Post 2009 and 2010, Dubai’s diversified economy started to pick up once again. The currently average apartment rent across the emirate is still 25 per cent lower than their peak in 2008.

“By contrast the studios in Deira rent for an average of Dh45,000 pa while the three bedroom apartments average Dh135,000 pa - five times more than what they were commanding in 1985,” said Stevens.

The consultancy expects that the Dubai market is set for a period of stability in 2015, with softening sales activity for apartments and villas due to upcoming supply, following declining sales and rental returns in the second half 2014.

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