Dubai rents are set to decline further next year with more than 20,000 new homes entering the market, brokers say.
After having fallen by up to 5 per cent this year in parts of Dubai, rents should drop by another 4 per cent in the suburbs next year amid the supply influx, according to the Core Savills 2017 forecast published yesterday.
Most of the new units are being built outside the city centre. The broker estimates that just 19 per cent of those homes – about 3,800 – are due to be built in the most established and central parts of the city next year.
Core Savills forecasts that this new supply will also push down house prices in many of these new communities even though it is predicting an uptick in average prices across the city next year.
“We continue to see rents in lease renewals to be marked down or at least see no change,” said David Godchaux, Core Savills’ chief executive.
But expected sales prices in Dubai are forecast to increase next year off the back of infrastructure spending on mega projects such as Al Maktoum Airport, Dubai Parks and Resorts, Dubai Creek Harbour and Bluewaters Island and Expo 2020, said Core Savills.
However, Jesse Downs, managing director of Phidar Advisory, expects prices and rents across Dubai to weaken next year as the slowing economy forces companies to downsize, dampening demand. The strong US dollar, to which the dirham is pegged, encourages the few investors still looking to buy to lower their budgets.
“It seems stakeholders forget to ask the simple question: who will live here and why?” Ms Downs said. She said banks continue to cut staff and the new jobs which are created are in lower paid industries – something which she says will depress rents, in turn depressing sales prices.
According to Core Savills, residential rents fell this year in all areas of Dubai apart from Jumeirah Lake Towers (JLT) and Jumeirah Village where they increased by 1 per cent. The largest declines were for villas on Palm Jumeirah where rents fell by 5 per cent over the year. Villas on Arabian Ranches declined by 4.5 per cent and rents for villas at Emirates Hills and Al Barari dipped 4 per cent.
lbarnard@thenational.ae
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