New-home pressure on rents; Dubai lease rates dip again
Residential rents in Dubai slipped marginally in March 2015 with rentals facing further pressure as more units are released, according to new reports.
“Prices in the rental market declined by 0.29 per cent in March, with rates rising 5.4 per cent year-on-year (y-o-y),” Reidin.com said in its monthly report.
Apartment rents fell 0.20 per cent month-on-month (m-o-m), but increased 6.3 per cent y-o-y.
Villa rentals declined by 0.25 per cent m-o-m, but were up one per cent y-o-y.
The sales price index fell 1.44 per cent though prices were up 1.5 per cent y-o-y. Overall, apartment sales prices were down 1.74 per cent m-o-m, but were up 0.8 per cent y-o-y.
Villa prices fell 0.24 per cent m-o-m, however, annual increase reached 4.5 per cent.
In February, the company’s housing market sentiment index survey had pointed to a rental decline in the first quarter 2015 though the rent index January registering a minor increase of 0.67 per cent.
In its first quarter report by MPM Properties, the real estate advisory subsidiary of Abu Dhabi Islamic Bank, said housing rents in Dubai were likely to face pressure with a flood of new supply coming to the market.
“While the first quarter saw 2,000 new apartments and villas added to the market, the delivery pipeline for the rest of the year is an estimated 19,400 units, which will weigh on rental prices and sales and encourage developers to target more affordable properties,” the report said.
Average apartment rents rose one per cent quarter-on-quarter and five per cent year-on-year.
Rents for villas fell by 5 per cent in the first quarter in some developments.
Knight Frank, a UK-based consultancy, has predicted Dubai residential rents to fall by five per cent, while prices to come down by 5 to 10 per cent in 2015. Similarly, other local consultancies also have predicted softening in the rental market in the range of five to 10 per cent.
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