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

RENTS DROP: CB Richard Ellis saw rents fall by 23 percent in Dubai during the first quarter of 2009. (Getty Images)

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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READERS' COMMENTS

Dubai Rents Fall by 23% - A Hog Wash
Posted by Deeyem, dubai, uae on Thursday 7 May 2009 at 17:57 UAE time


Dubai is not only Discovery Garden and International City
The Rents in majority of the centre - Bur Dubai, Karama, Satwa & Deira are increasinbg...YES Increasing even in todays time...

On One Hand RERA says we want the rents to remain same this year, if not reduce and then they post a Virtual Rental Index created from warped thinking which is making the landlords greedy and they are pushing up the renatlas of even OLD BLdgs. in Bur Dubai, karama, Satwa and Deira by 10 to 20% higher...
They dont care wether Expats bleed or work with half salary...they want their pound of flesh...GOD BLESS THEM

Great News or Bad News - to SS
Posted by John Thomas, Dubai, UAE on Thursday 7 May 2009 at 16:45 UAE time


So basically you are saying that everyone was better off when it was daylight robbery and people were spending 75-80% of their salary in rent and taking out loans to cover it? - You should re-think that, it was abominable to say the least what these lanlords were charging people for rent in Dubai - where did they think they were? midtown Manhattan??? It is sad that so many people lost their jobs, but this rent and housing rip off lunacy had to end - no pitty on that here!! By the way, do you work for a real estate company?

Great news or Bad News
Posted by ss, dubai, UAE on Thursday 7 May 2009 at 14:30 UAE time


Well, the above is certainly a great news for all the expat residents, temporarily. At the same time, this would have an impact on all of us. Already, we are seeing Job losses around us and believe me we are all affected.

Hence, instead of celebrating the above, we should look into how we can rebuild the economy. Because its people, who make or destroy the cities not the governments.

Give it a thought, its all circles. All these sharp falls in rent, commodity prices would have a catastrophic impact on us and eventually on the country.

Well, correction is called for, but certainly not at the cost of job losses or plummetting business.

Bottom Out
Posted by Sunita Bhatia, Dubai, U.A.E. on Thursday 7 May 2009 at 14:18 UAE time


It makes me wonder when is the bottom out on prices going to happen - it is going to be a bottom out or a complete flat out. What is the price going to be for a bottom out or flat out property - less than the original price???? Have we all got fooled..and still want to be the fools??

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