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

Thursday, 7 May 2009 11:03 AM

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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Posted by: Deeyem Thursday, 7 May 2009 5:57 PM[UAE] - uae

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

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Posted by: John Thomas Thursday, 7 May 2009 4:45 PM[UAE] - UAE

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?

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Posted by: ss Thursday, 7 May 2009 2:30 PM[UAE] - UAE

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.

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Posted by: Sunita Bhatia Thursday, 7 May 2009 2:18 PM[UAE] - U.A.E.

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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Posted by: kamal mohamed Thursday, 7 May 2009 1:47 PM[UAE]

The Global Crises took place early Aug however it hit Dubai end of 2008 and Q1 2009. One of the main reasons for making the problem worse is that local banks squeezed the credit which in turn forced many buyers to default. this has shaken the confidence in the market ......leading to a shaken real estate market at present. The US supported the market ( local companies) by injecting stimlus funds to revive the cycle contrary to what happened in Dubai.

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

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