Where Dubai property rents have risen and fallen, Q3 2019
Take a look in the slideshow below at how rents have fared in different areas of the city
What was the general market movement in Q3?
It has been a tenant-friendly market across the UAE in 2019, with Dubai in particular offering opportunities for renters to grab what they may consider a good deal.
The declines in rents continued in the third quarter although some brokers said they consider the residential market to have reached the bottom of its cycle as the declines begin to slow down.
Chestertons reported a 1 per cent rental decline quarter-on-quarter fall for both villas and apartments, as did JLL, while Asteco reported falls of 3 per cent and 2 per cent, respectively.
Cavendish Maxwell's 12-month figures showed an annual drop of 15 per cent for apartments and 12 per cent for villas and townhouses, and 3.6 per cent quarter-on-quarter for all property types.
Anecdotally, many tenants are saying they have been paying less than a year ago, with a poll carried out by The National in September showing 57 per cent of respondents had experienced a rent cut - of which more than half were granted an annual reduction of more than 10 per cent.
What else did the property companies have to say?
Asteco said it anticipates the downward trend will "likely solidify due to the sheer volume of supply expected for handover in the short-to-medium term".
It added, however, that for tenants to make the most of the situation, they will need "negotiating skills" and "a willingness to move should the landlord prove unyielding".
It is the cost of moving that works against tenants, with not just the actual lifting and loading to consider, but the payment of a deposit on a new property, plus commission, and the possibility of needing resized or new curtains among the other miscellaneous expenses which arise.
As with previous quarters during the past two years or so, landlords are offering incentives to tenants, including rent-free periods, multiple rent cheques (sometimes up to 12), short-term leases and inclusion of maintenance fees within the annual rent.
"Due to challenging market conditions, landlords have become highly competitive as those who are still paying off mortgages cannot afford for their property to be vacant for long periods of time, particularly amid increasing market supply," said Chestertons.
How does the supply situation look for the rest of the year?
There is no shortage, that is for sure. Most of the supply is concentrated in a few communities, according to Cavendish Maxwell, which pointed to Jumeirah Village Triangle, Al Furjan, Dubailand and Al Barsha as taking up 70 per cent of the upcoming supply.
It added that 5,000 to 7,000 units are expected to be completed in the fourth quarter.
JLL noted that developers are launching fewer new projects, but said 6.500 units were completed in the third quarter, bringing the total for the year to 23,000. It said major completions in Q3 included Sparkle Towers in Dubai Marina, Sidra villas in Dubai Hills Estate and BLVD Crescent in Downtown Dubai.
Asteco reported 7,100 units completed in Q3, and expects 7,500 in the last quarter of the year.
"Despite ambitious handover plans, new supply is likely to fall short of earlier estimates," it said. "Delivery is now expected to reach a total of just over 20,000 apartments and 7,500 villas in 2019 (by year-end).
"Whilst these figures represent a marked decline on previous projections, it is still a significant volume and a notable increase from 2018, which recorded deliveries of 12,000 apartments and 2,750 villas."
Anything else of note?
Yes. A new property price index was announced allowing residents to compare prices for both renting and buying across Dubai's communities.
Called Mo'asher, the joint venture between Dubai Land Department and Property Finder provides data going back as far as 2008, including average price per square foot per sale and average annual rent for freehold, non-freehold and leasehold properties. It is set to add further transparency to the market.
Aside from this, in September Dubai formed a higher committee for real estate, headed by Deputy Ruler Sheikh Maktoum bin Mohammed and senior property developers, that aims to achieve a balance between supply and demand in the sector.
The committee will ensure semi-governmental real estate companies do not compete with the private sector.
There has been no update yet on the study of a proposal for a three-year rent freeze in the emirate.
"The new rental law and the three-year contract that the Land Department is drafting is being studied by the relevant departments," a DLD spokesperson said back in May.
Away from the softening rental market, big-money sales are still taking place in Dubai.
The third quarter saw a District One villa in Mohammed bin Rashid City sell for Dh90 million, making it the most expensive sale during the three-month period.
It was followed by a Dh74m sale for a One Palm Jumeirah penthouse and Dh64m Emirates Hills Sector V villa, according to Luxhabitat.
Updated: November 5, 2019 08:44 AM