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23 April 2024

Dubai rent relief: Prices expected to fall

Real estate agents say the 25 per cent downpayment clause has impacted sale of completed properties in the affordable communities. (Dennis B Mallari)

By Parag Deulgaonkar

A number of global real estate consultancies have predicted rents to fall in 2015, but the Reidin Housing Market Sentiment Index Survey expects the decline in the first quarter itself.

The index result shows that sentiment of rental price is ‘moderately negative’, but for the rental volume is ‘moderately positive’ for the first quarter, which means rental transactions will be more compared to the previous quarter.

The sentiment of sales price and sales volume remain ‘negative’ while the overall housing markets professional sentiment is ‘moderately negative’.

In January, JLL, a real estate consultancy, said Dubai residents could expect rental declines this year, with even rent-free periods being offered to tenants. A week later, Knight Frank, a UK-based consultancy, said residential rents are likely to fall by five per cent, while property prices will be down by 5 to 10 per cent in 2015.

Read: Expect Dubai residential rents to fall by 5 per cent this year; Expect Dubai rental decline, rent-free periods this year?

The current residential supply stands at 377,000 with JLL expecting 25,000 new units to be delivered this. Experts believe that in the run-up to Expo 2020, the emirate is likely to face a housing supply shortage.

HSBC Global Research has said that the emirate could ‘fairly easily’ absorb new supply even if the population grows less than 5 per cent per year.

Data released by Dubai Statistics Centre shows non-labour population jumped by over 7 per cent in 2012 and 2013, while the number of households grew by 7.6 per cent in both years.

Emirates 24|7 has reported that 78 new projects were launched in 2014 with the Dubai Land Department reviving at least 43 stalled projects worth over Dh10 billion through its Tayseer and Tanmia initiatives.

As for the index, Reidin said the quarterly structured questionnaire survey is conducted among housing market players such as agents, developers, bankers and consultants. However, the survey size isn’t disclosed.