A majority of households in Dubai expect increases in their rent renewal prices, as rentals rose at the slowest pace in the last three months of 2015, according to Emirates NBD Dubai Real Estate Tracker.
“Around 62 per cent anticipate an increase in their rent renewal price, while only seven per cent expect to negotiate a reduction,” the bank’s report, released on Monday, said.
Though a moderate rise was reported in newly agreed rental prices, the latest increase was the slowest since the survey began in April, it added.
The data as well points to a drop in new rental enquiries for the first time since the survey began. Demand remained stable for apartments, but villa enquiries saw a dip.
“People living in apartments were more likely to report a rise in their rental price than those living in villas. However, in contrast to the trends expected by real estate agents for newly agreed lettings, households overwhelmingly expect higher rent renewal prices in the next three months,” the report added.
Around 47 per cent of real estate agents expect a fall in Dubai property values over the course of 2016, while 32 per cent forecast a rise.
Moreover, survey respondents noted market conditions were likely to favour buyers over the next 12 months, as construction volumes look set to remain strong as the “uncertain economic outlook has acted as a brake on investor demand.”
However, the downbeat expectations of agents was contradicted by overwhelmingly optimistic households.
Around 66 per cent of households expect a rise in their property value during the next 12 months while only 14 per cent forecast a reduction.
“Our survey is consistent with recent data on residential sales and lettings prices in Dubai, which show prices continuing to ease. However, the momentum of price decline has moderated in December. The strong dollar and low oil prices are likely to remain headwinds for the real estate sector in 2016,” said Khatija Haque, Head of MENA Research at Emirates NBD.
On Sunday, the Dubai Land Department said total value of real estate transactions had jumped 22.5 per cent to Dh267 billion in 2015 compared to Dh218 billion in 2014.
“The reports issued by our experts assure that the Dubai market has reached a stage of wise maturity and rational dealing with the requirements by the various sides in the real estate market,” said Director-General Sultan Butti bin Merjen.