Rents in Dubai have fallen less than expected during the first half of the year as an expected glut of new homes coming onto the market slowed to a trickle.
According to property agent Asteco, average rents for flats in Dubai fell by just 2 per cent since the start of the year and average villa rents fell 1 per cent.
Despite predictions that as many as 20,000 new homes could be handed over this year, Asteco reported that 3,000 apartments were handed over to buyers during the first half of the year as developers delayed projects waiting for the market to pick up.
Asteco said that rents for larger units fell by more than the average – over 3 per cent – as tenants attempted to reduce a growing cost of living by cutting costs wherever they could, sending family members back to their home countries and moving to smaller units.
“Various measures to improve government revenues are being considered by the Ministry of Finance such as the implementation of value added tax (VAT) from 2018 onwards, as well as additional taxes on other products,” said John Stevens, Asteco’s managing director.
“Increases in water and electricity charges are also being considered. This would lead to a significant rise in the cost of living, which may become prohibitive for many residents. This would accentuate a trend already seen since the beginning of the year, whereby residents are becoming more budget-conscious, downsizing to more affordable units and, in some cases, sending family members back to their home country.”
Rents for high-end one-bedroom apartments in DIFC fell from Dh113,000 last year to Dh108,000 in the first half of this year, Asteco said, and in Downtown Dubai they fell from Dh115,000 to Dh110,000. For larger apartments the declines were even more pronounced. For the average three-bedroom apartment in DIFC, rents fell from Dh230,000 last year to Dh210,000.
But for smaller units in more affordable locations rents in some locations actually increased. According to Asteco, the average rent for a one-bedroom unit in Business Bay rose from Dh93,000 in 2015 to Dh95,000 in the first half of 2016. And in the Greens, rents rose from Dh95,000 to Dh98,000.
lbarnard@thenational.ae
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