Property rental rates in Dubai continued to come under pressure during the third quarter and falls are expected during the rest of the year, according to a new report.
Average rental rates for apartments fell 4 per cent during the three months to the end of September, while villa rentals dropped 3 per cent on average, new data from property firm Asteco showed.
This follows a fall in rents throughout 2017, as thousands of new properties have come on to the market at a time when employment growth has been weak.
Asteco said in its report that although between 3,000 to 4,000 more apartments are likely to arrive before the end of the year, some supply forecast for Q4 completion will spill over into 2018.
"Despite increased government spending in infrastructure, hospitality and retail in the run-up to the Expo 2020, market sentiment remains low largely due to weak employment growth and the bearish outlook in terms of oil price and global economic recovery," it said.
The increase in available homes has meant that tenants have been able to obtain more flexible payment plans of up to six or 12 cheques rather than the previously more typical annual payment.
Other incentives include rent-free periods of up to two months, Asteco said.
It was noted that the line between rental rates for different villa unit types within the same community is becoming increasingly blurred.
"For example, within a rental rate range of Dh110,00 to Dh140,000 tenants can choose between a two, three, four or five bedroom townhouse in Jumeirah Village, although cheaper and more expensive units are available for each product type," Asteco said.
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Transactions on property sales meanwhile have been rising, but prices have fallen as off-plan schemes have flooded the market.
A report yesterday from Core Savills said the number of deals for built units since the beginning of this year has increased by 7 per cent year-on-year, while off plan sales jumped 62 per cent.
Average unit value in the off-plan affordable housing segment fell by 11 per cent compared to last year.
Asteco said apartment sales were "broadly stable" during the third quarter, with prices down 4 per cent on average year-on-year. Villa prices meanwhile were down 3 per cent annually.
