Rents in Dubai's popular residential neighbourhoods have dipped further in the past month as the emirate's leasing market continues to soften. A two-bedroom villa in The Springs - one of the most sought-after properties in Dubai - now rents for Dh120,000 (US$32,670) a year compared with Dh145,000 a month ago, a 17 per cent decline, according to data released by Landmark Advisory, a division of the Dubai-based estate agent Landmark Properties. Six months ago, it would have cost at least Dh197,000 a year to rent a home in The Springs.
While some estate agents claim that the property sales market has "bottomed out", the decline in rents shows no immediate signs of abating. There is concern that prices will dip further if families that have suffered redundancies leave the UAE when school terms end this summer. "When we take our clients around they say they like a property that's priced at Dh200,000, but they tell us to call if it reaches Dh100,000 after the school term and they'll take it," said Rose-Marie Kilzi, the leasing director of Great Properties, a Dubai-based estate agent. "This is a trend that we're observing almost every day. People are under the impression rents will go down that much, but I don't think it will happen; the market is stabilising now."
Ms Kilzi said rents advertised in Discovery Gardens and International City are up to 50 per cent less than prices quoted two months ago. Prices in Jumeirah, Dubai Marina and Umm Suqeim have been more resilient, she said. "We have plenty of property on the market, but the demand is not there," she said. "To lease their homes, people are having to bring the price down." One-bedroom flats in Discovery Gardens near Ibn Battuta Mall now rent for Dh60,000 on average compared with Dh70,000 a month ago - a 14 per cent fall. Meanwhile, one-bedroom flats in the more upmarket Dubai Marina cost Dh85,000 on average, a 6.5 per cent drop from Dh91,000 last month.
The data indicate that apartments in Dubai Marina are holding their rental value better than property on Dubai's outskirts. Many residents opt for The Marina for easy access to restaurants, hotels and beaches. Villas in projects such as The Springs, The Meadows and Jumeirah Islands that were highly prized during the economic boom - sending their prices spiralling upwards - have suffered the steepest drop as the job market contracts and companies tighten housing allowances. A comparison of Landmark's research with Dubai's official rental index, which the Real Estate Regulatory Agency (Rera) published in January using information gathered in late 2008, reveals the rental market's stunning reversal following years of rapid inflation. A two-bedroom flat at The Greens rented for between Dh168,000 and Dh180,000 in January, according to the official rental index. Based on Landmark's figures, which were collected in March, the current range is Dh120,000 to Dh140,000.
Likewise in Palm Jumeirah, where two-bedroom flats were priced between Dh210,000 and Dh240,000, according to Rera's index. The Landmark figures, which are based on property listings, "mystery shopping" and interviews with brokers, suggest that rents start at Dh140,000. Average prices for villas in The Meadows and Jumeirah Islands have dropped more than Dh100,000 since January. With the completion of thousands of housing units giving tenants the luxury of choice, projects that suffer from construction noise or the lack of shops and amenities have witnessed a sharp drop in rents.
In one such development, Jumeirah Lakes Towers, the rent for a two-bedroom apartment has fallen from a range of Dh170,000 to Dh220,000 in January to Dh80,000 to Dh150,000 now. Only flats at Al Barsha near Mall of the Emirates appear to have retained their value. Two-bedroom flats that Rera said rented from Dh100,000 to Dh160,000 in January are now priced between Dh100,000 and Dh135,000, according to Landmark.
Rera, Dubai's housing regulator, said recently that its official index of rents would be updated this month to keep it in line with current prices. It has been four months since Rera published its first index. Mohammed Khalifa bin Hammad, the director of real estate relationship regulation at Rera, said in a statement that average rents had dropped by 10 to 15 per cent since the first rental index was published.
Although Landmark's figures reflect current market conditions, landlords cannot use the data as a legal means of setting rents. If prices fall significantly below levels stated in Rera's official index, however, landlords are within their rights to raise rents by a certain margin.
rditcham@thenational.ae
