Rents in Dubai likely to fall further

Rentals in Dubai are likely to fall further during the summer months, with prospective tenants getting the upper hand and being able to bargain much better with landlords, according to realty experts.

“We expect rents for larger units such as two- and three-bedroom apartments to fall quicker than those for one-bedroom and studios,” Youcef Betraoui, Managing Director, Land Sterling - Mena, told Emirates 24/7.

“The employment market in Dubai is still under ‘frustration’ and with the increase in school fees, families are looking for alternative ways to manage their finances by going back home or migrating to other countries,” he added.

“The market has witnessed an average rental decrease of 20 to 25 per cent in the past one year and we assume this figure will increase.

During summer we will also observe the holy month of Ramadan during which the working hours are relaxed and there is usually less activity in the real estate market,” he added.

Kosta Giannopoulos, Manager-Residential Sales and Leasing, Head Office, Better Homes, said: “Rents may well decline further due to the oversupply in general and, of course, the lower demand due to the summer holidays will no doubt magnify the trend.”

Asked if affordable communities such as Discovery Gardens, International City, Dubai Silicon Oasis, Jumeirah Lakes Towers (JLT) and International Media Production Zone will witness further rental decline, Betraoui said: “We are of the opinion that the affordable communities are close to bottoming out as rental agreements these days come with various incentives such as 14 months contracts, four to 12 rental cheques and low broker fees.

“We expect the rental market to see a slight decrease of about five per cent in the upcoming three months.”

Giannopoulos, however, said due to the flight to quality phenomenon it was likely that rates will continue to decline in these areas.

“Landlords are starting to think that they are reaching the point of not being able to reduce further, but the old adage still applies that some income is better than no income,” he said.

“Rentals could possibly drop by up to a further 25 per cent, but even those communities will vary in decline because there is a variance in quality of buildings within JLT. And Discovery Gardens continues to offer a nice garden setting and proximity to Ibn Battuta Mall, which makes it attractive for families.”

Summer months are the best time to bargain for cheaper rents, said Betraoui.

“Landlords like to keep their buildings fully occupied regardless of seasons and thus will want to maintain their existing tenants when it comes to rent reviews. Landlords do decrease rents for existing tenants, but not in accordance with the market. On the other hand, they are willing to be flexible on rental payments.”

However, Better Homes says transactions do go up during the summer months.

“Historically we've witnessed an increase in residential leasing transactions over the summer months, because new families tend to arrive before the summer holidays end in order to settle in,” Giannopoulos said.
 

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