Villa rental rates in Dubai plunged by almost a quarter over 12 weeks, as estate agents warn prices may tumble even further.
Rental rates keep tumbling in Dubai
DUBAI // Villa rental rates in Dubai plunged by almost a quarter over 12 weeks, according to new data published today - and agents warned that prices may tumble further should the worst predictions of a summer population exodus come true. House rental prices dropped by an average of 24 per cent in Dubai between April and June, while those of flats fell by 21 per cent, according to a report by the property services firm Asteco.
Villa and apartment purchase prices also fell by an average of 15 and 13 per cent respectively, according to the figures, although properties in Palm Jumeirah bucked the trend, increasing by up to 20 per cent. The research comes only days after statistics showed that rents had fallen by up to 35 per cent in parts of Abu Dhabi, although they remained far higher than those in Dubai. Several agents last month said Abu Dhabi landlords were keeping rents in the capital high and clinging to unrealistic income expectations, which had worsened the housing shortage.
Andrew Chambers, the managing director of Asteco, said the disparity in rents between the two cities was driving large numbers of people who work in the capital to commute from Dubai. "We have seen prices in Dubai fall again this quarter, and we are seeing a continuation of the trend of people who work in Abu Dhabi relocating to Dubai," Mr Chambers said. "In this sense, prices in Dubai are being buoyed by people who are working in Abu Dhabi. People are comparing the prices and deciding whether they would like to live in an apartment in Abu Dhabi and pay a high price but not have to commute, or a place in Dubai, where they will have to drive, but they will pay a lower price and get extra facilities like a pool and a gym."
Dubai's International City district was the cheapest area to rent a one-bedroom flat. It saw rents fall by 21 per cent during the last three months to Dh40,000 per year. The most expensive area was Palm Jumeirah, where tenants could expect to pay Dh100,000. The most expensive area to rent a three-bedroom villa was Downtown Burj Dubai, where it would cost Dh265,000 per year, while the cheapest area was Mirdiff at Dh107,000.
The property report said that if there was a large-scale movement of people out of Dubai during July and August, prices could drop further. Jesse Downs, the director of research and advisory services at Landmark Advisory, a division of the property brokerage firm Landmark Properties, said she expected to see more declines. "In terms of rents, we are still in a downwards price cycle," she said. "Prices have come down significantly. However, in some areas prices have started to plateau, and in others even increase. In recent years, we have seen a large inflation of prices, which has forced some people to leave Dubai and move to areas such as Sharjah."
She added that people previously priced out of the market were now considering moving back in. That, combined with the large number of people working in Abu Dhabi but living in Dubai, was helping stabilise rents in Dubai. "We have expected there is going to be a mass exodus from Dubai, and we have already seen people leaving," she said. "I do think prices will decline but it is hard to say by how much. It depends on the extent of the pent-up demand."