Dubai rents fell 23%, sharp fall in sales in Q1 - report

Residential rents in Dubai fell 23 percent in the first quarter, with Discovery Gardens posting the biggest drop, while prime office rents declined 18 percent, CB Richard Ellis said on Thursday.

Both off plan and finished properties witnessed a sharp drop in sale prices over the last quarter, as the number of transactions fell by 60 percent from the corresponding period last year.

The fall in rents was particularly steep in Nakheel’s Discovery Gardens development, where the average rent for studios and one bedroom apartments fell by 28 percent.

Interest from “real” investors is rising in the market for properties that are ready to occupy, but many are waiting for prices to bottom out before buying, CBRE said.

“In some of the developments prices have already bottomed out, providing excellent investment opportunities for investors,” analyst Matt Green said.

Many projects currently due to be completed this year are likely to be further delayed and pushed back into next year, the commercial property consultant said.

Developers of off plan properties have revised payment plans and in few cases their prices in order to retain a steady flow of funds for their developments.

Prime office rents in Dubai fell by around 18 percent on the quarter.

Secondary locations with Grade A office buildings, mainly in the freehold locations of Jumeirah Lakes Towers and TECOM, are experiencing a sharp decline in lease and occupancy rates.

Grade A office lease rates at the summer peak in these areas were between AED2,370 ($645) and AED3,230 ($879) per square metre.

Currently landlords are quoting a reduced rate of AED1,400 ($381) to AED 2,690 ($732) per square metre along with additional incentives that include more relaxed payment terms.

Lack of transparent transactional data makes it difficult to accurately gauge changes in Abu Dhabi’s rental and sales data, CBRE said.

“During the first quarter, residential sale prices have been affected by transactional gridlock and demand for off plan sales is virtually non existent in some instances,” Green said of the Abu Dhabi market.

“Distressed sales have been occurring but a natural floor price exists,” he added.

Abu Dhabi villa rental prices fell between 5 and 15 percent in the quarter, according to the report.

In the office market, prime rental rates have come down by around 20 percent but limited supply will limit future price drops, CBRE said.

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