Rents for studio apartments in Dubai fell by 11 per cent in 2011, registering the maximum rental decline, while average apartment lease rates declined by eight per cent compared to 17 per cent in 2010, according to CB Richard Ellis.
Lease rates in older residential districts remained unchanged during the fourth quarter 2011 as the opening of The Green Line helped stabilise rents, the real estate consultancy said in its fourth quarter 2011 report.
“Properties within 500 metres of operational Metro stations have experienced improved occupancy levels as tenants target accommodation with strong transport links,” it said.
Villas and townhouses outperformed apartments during the year as limited supply of units and stronger demand fundamentals saw rents decline just six per cent over the period, less than half of the fall registered during 2010.
Around 300,000 square metres of residential accommodation was sold at an average rate of Dh9,500 per square metre, which represents a five per cent growth year on year.
The value of residential transactions in Dubai rose to Dh2.85 billion in fourth quarter 2011 compared to Dh1.7bn same period last year, registering a 67 per cent increase.
“In value terms, the overall increase was less striking at just six per cent growth, with total transactions increased from Dh2.7bn in the third quarter to Dh2.85bn in the fourth quarter. Compared to fourth quarter 2010, the increased value of transactions was significant, rising 67 per cent from Dh1.7bn to Dh2.85bn,” CBRE said.
The report said it expected the commercial property sector to remain under duress throughout 2012 with around 750,000 sqm of new stock could enter the market, provided that construction delays are kept to a minimum.
"Lease rates in Dubai's central business district are expected to remain quite stable during the year," CBRE said.
Moreover, the Dubai residential market has become very fractional with end user focus now becoming project- and even building-specific within any given area. The quality of facilities, accessibility, property management and maintenance, are all factors together with traditional drivers of quality, price and location.
The market will also see landlord incentives increase as new supply is completed and competition to secure tenancies intensifies.
"The residential sector will continue to outperform offices as stronger demand fundamentals are sustained by solid population growth," CBRE said.