Contrary to the believe rents were declining in Dubai on a monthly basis, August has been an exception for the apartment market segment, data released by Reidin.com reveals.
On an annual basis rents in apartments market are down 1.1 per cent, leasing rates rose by one per cent month-on-month (m-o-m) in August 2015.
Villa rentals, however, continued to fall m-o-m by 0.61 per cent, as yearly decline reached 2.9 per cent. Overall, rental fell 1.4 per cent year-on-year (y-o-y), the data shows.
Apartment and villa rents had fallen by 0.70 per cent and 0.50 per cent m-0-m in July 2015.
On the other hand, sales price Index for all residential market decreased by 0.75 per cent in August, as the annual decline reached 9.9 per cent, Reidin.com said.
Apartment sales prices fell 0.55 per cent m-o-m with y-o-y fall being 10.4 per cent. Villa sales prices were down 1.45 per cent m-o-m as annual decline reached 8 per cent.
In early 2015, JLL, a real estate consultancy, said Dubai residents could expect rental declines this year, with even rent-free periods being offered to tenants, with Knight Frank, a UK-based consultancy, projecting residential rents to decline by five per cent and property prices to go down by 5 to 10 per cent in 2015.
In April, however, Land Sterling, a Dubai-based chartered surveyor and property consultancy firm, predicted that even though rent hikes in the first quarter go against the current market softening sentiment the “mid-two quarters were to be the rental demand dampeners and may see a wider rental declines.”
A report issued by Dubizzle, a classified website, in August revealed rentals in old Dubai had increased in the second quarter of the year, with studio apartments in Deira reporting an 18 per cent increase, driven by a maintained demand by existing occupants and no new supply entering the market.
With the UAE population expected to grow, developers have ruled out the possibility of oversupply of residential units in Dubai.
Moody’s Investors Service, a global ratings agency, has said that the Dubai government’s spending on infrastructure and encouraging more foreign investments in various sectors will support the real estate market over the next five years.
In contrast, Standard and Poor’s have put the price decline percentage at 10 to 20 per cent in 2015, but believes property companies that it rates (Emaar Properties, Aldar Properties, Damac Real Estate Development, DIFC Investments, Dubai Investments Park Development Company, Emaar Malls Group and Majid Al Futtaim Holding) are in better position to absorb the declines.