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Dubai rents fall by up to 34% in Q1 - report
Thursday, 16 April 2009
RENTS DECLINE: Dubai apartments and villas have seen rental values plummet in the first quarter of 2009. (Getty Images)
Apartment rents in Dubai have fallen by 22 percent with villa rents dropping by 34 percent during the first quarter of 2009, according to a latest industry report.
According to figures published by property management company Asteco, the average rent for a studio is now AED61,500, for a one-bed apartment AED93,000, for a two-bed apartment AED132,500 and AED185,000 for a four-bed apartment.
The biggest rental drops, according to Asteco, were in Palm Jumeirah, Al Barsha, Bur Dubai and Discovery Gardens where average rents are about 30 percent lower than in the fourth quarter of 2008.
"Unit owners have realised that they can no longer expect double-digit yields, thus they have to compete for the shrinking tenant pool as people leave and supply increases," the report said.
Villa rents have also tumbled with the largest fall of 41 percent seen in the Springs and Jumeirah Islands.
The Asteco report comes just days before Dubai's Real Estate Regulatory Authority (RERA) is scheduled to release its revised rental index.
In the commercial market, office sale prices fell as much as 42 percent since the fourth quarter, Asteco said.
“Instead of purchasing office space, many companies have opted for leasing to help with cash flow,” the company said.
Rent Free fall in Dubai
Posted by George Ittyarah, Dubai, UAE on 27 April 2009 at 00:39 UAE time
Time is coming up now that the sharing of apartments & villas in Dubai will be a thing of the past. People were forced to share apartments and villas because of the unbearable rental cost. Hot summer of 50 deg C even without AC is much more bearable than the rent.
Sharing tenants of the 4000 villas who were ejected mercilessly from their accomodation on short notices during last November / December will also be able to afford decent independent life style in villas and apartments in and around Dubai. Traffic jams to and from Sharjah/Ajman will also be a thing of the past since many people are already finding cheap accomodation around Dubai. Thanks for the silent recession.
Thanks
George C. Ittyarah
Posted by George Ittyarah, Dubai, UAE on 27 April 2009 at 00:39 UAE time
Time is coming up now that the sharing of apartments & villas in Dubai will be a thing of the past. People were forced to share apartments and villas because of the unbearable rental cost. Hot summer of 50 deg C even without AC is much more bearable than the rent.
Sharing tenants of the 4000 villas who were ejected mercilessly from their accomodation on short notices during last November / December will also be able to afford decent independent life style in villas and apartments in and around Dubai. Traffic jams to and from Sharjah/Ajman will also be a thing of the past since many people are already finding cheap accomodation around Dubai. Thanks for the silent recession.
Thanks
George C. Ittyarah
And another thing....
Posted by Steve, Dubai, UAE on 20 April 2009 at 09:26 UAE time
As the market finds its proper level, the next change we will see is the agents commission being paid by the landlord for whom he is working, not the tenant.
Posted by Steve, Dubai, UAE on 20 April 2009 at 09:26 UAE time
As the market finds its proper level, the next change we will see is the agents commission being paid by the landlord for whom he is working, not the tenant.
Show all comments
An Old Saga
Posted by Jo, Dubai, United Arab Emirates on 18 April 2009 at 20:35 UAE time
This is a very old problem for society. The 'greedy' landlords want to rape the tenants and the 'greedy tenants' want to rape the landlords. The tenants are downtrodden and harshly treated and the landlords cant understand why the tenants have little respect for them.
I am both a landlord and a tenant. I take exception to those who are obviously left wing socialist tenants who think every landlord is a capitalist wanting to exploit them at each opportunity and I am confused by the landlords who refuse to accept they opperate in a market ecomomy.
'It is what it is'. It may change in 6 months or it may not. Landlords and tenants enter into contracts because of this changing market landscape.
Posted by Jo, Dubai, United Arab Emirates on 18 April 2009 at 20:35 UAE time
This is a very old problem for society. The 'greedy' landlords want to rape the tenants and the 'greedy tenants' want to rape the landlords. The tenants are downtrodden and harshly treated and the landlords cant understand why the tenants have little respect for them.
I am both a landlord and a tenant. I take exception to those who are obviously left wing socialist tenants who think every landlord is a capitalist wanting to exploit them at each opportunity and I am confused by the landlords who refuse to accept they opperate in a market ecomomy.
'It is what it is'. It may change in 6 months or it may not. Landlords and tenants enter into contracts because of this changing market landscape.
falling rents is a good thing
Posted by Mart on 18 April 2009 at 14:08 UAE time
Akbar,
Falling rents is a good thing. If it causes more mortgage defaults then that isn't a tenants problem - that is the landlords problem.
The landlords did well for a few years, whilst tenants suffered. The sensible ones would have sold as prices hit absurd levels last year. For those that held on, they made a bad call, and they'll lose money. Some of them will default on their mortgage and some of them will lose everything they have, but that is life. The massive returns that could be made on property should have signalled that there was massive risk attached. That risk has materialised in a massive crash in prices. Many would say it was a matter of "when", not "if"
Falling rents is excellent news. It gives tenants more money to spend in Dubai on cars, restaurants etc, helping the economy. It makes the cost of living much more competitive, attracting overseas companies to Dubai.
Landlords will lose out of course, but we all have to think about the good of Dubai as a whole, not just a few people who made bad investments, and falling rents is definitely good news. So lets celebrate!
Posted by Mart on 18 April 2009 at 14:08 UAE time
Akbar,
Falling rents is a good thing. If it causes more mortgage defaults then that isn't a tenants problem - that is the landlords problem.
The landlords did well for a few years, whilst tenants suffered. The sensible ones would have sold as prices hit absurd levels last year. For those that held on, they made a bad call, and they'll lose money. Some of them will default on their mortgage and some of them will lose everything they have, but that is life. The massive returns that could be made on property should have signalled that there was massive risk attached. That risk has materialised in a massive crash in prices. Many would say it was a matter of "when", not "if"
Falling rents is excellent news. It gives tenants more money to spend in Dubai on cars, restaurants etc, helping the economy. It makes the cost of living much more competitive, attracting overseas companies to Dubai.
Landlords will lose out of course, but we all have to think about the good of Dubai as a whole, not just a few people who made bad investments, and falling rents is definitely good news. So lets celebrate!
Falling rents?
Posted by Alex, Dubai, UAE on 16 April 2009 at 14:02 UAE time
Well said Dag, the market has to find it's balance maturaly without external factors like RERA, agents and landlords greed, speculators etc.
I had to move from a 48k villa in Al Wasl (Very old contract) to a 135k 2bed villa in Arabian ranches and with nine(9) months my next door villa (identical to my own) was rented at 260k!!!!!!!!!
Whom would like to take a shot at justifying/explaining this to me!!
Alex
Posted by Alex, Dubai, UAE on 16 April 2009 at 14:02 UAE time
Well said Dag, the market has to find it's balance maturaly without external factors like RERA, agents and landlords greed, speculators etc.
I had to move from a 48k villa in Al Wasl (Very old contract) to a 135k 2bed villa in Arabian ranches and with nine(9) months my next door villa (identical to my own) was rented at 260k!!!!!!!!!
Whom would like to take a shot at justifying/explaining this to me!!
Alex
cake and eat it
Posted by ametis, Dubai, UAE on 16 April 2009 at 13:41 UAE time
So what you are saying infact Akbar is that, Landords should have their cake and eat it...
The tennat covers all costs, leaving no speculation to the investor??
What about the appreciation of the property value??, do you give a share of that to the tennant??
More chance of raining locusts me thinks
Posted by ametis, Dubai, UAE on 16 April 2009 at 13:41 UAE time
So what you are saying infact Akbar is that, Landords should have their cake and eat it...
The tennat covers all costs, leaving no speculation to the investor??
What about the appreciation of the property value??, do you give a share of that to the tennant??
More chance of raining locusts me thinks
To Akbar Kasim - Falling rents
Posted by DAG, UAE on 16 April 2009 at 10:12 UAE time
Akbar - a very valid argument in the light of current conditions, however, when my rents increased 100% in 4 years I didn't here any agent or landlord considering that argument to say 'where will the guy get the extra 20% I'm asking'? - equally valid don't you think? The attitude was pay up or get out!
Look, UAE property should never have reached the prices that people paid - there was no justification other than speculator & agent driven greed. Now we are moving back to what will be the correct pricing so for those who paid more, it's just a bad investment, take it on the chin and move on.
Also understand that when a tenant is paying 20-25% of salary for accommodation instead of 50-60%, he will have move disposable income to be able to save & spend in the economy - that is a good thing and how it used to be.
So I say, let the prices fall, much further, much deeper, a second & third wave will be welcome to most of the residence here.
DAG
Posted by DAG, UAE on 16 April 2009 at 10:12 UAE time
Akbar - a very valid argument in the light of current conditions, however, when my rents increased 100% in 4 years I didn't here any agent or landlord considering that argument to say 'where will the guy get the extra 20% I'm asking'? - equally valid don't you think? The attitude was pay up or get out!
Look, UAE property should never have reached the prices that people paid - there was no justification other than speculator & agent driven greed. Now we are moving back to what will be the correct pricing so for those who paid more, it's just a bad investment, take it on the chin and move on.
Also understand that when a tenant is paying 20-25% of salary for accommodation instead of 50-60%, he will have move disposable income to be able to save & spend in the economy - that is a good thing and how it used to be.
So I say, let the prices fall, much further, much deeper, a second & third wave will be welcome to most of the residence here.
DAG
Falling rents, pressure on mortgage payments
Posted by Akbar Kazmi, Dubai, UAE on 16 April 2009 at 08:10 UAE time
While rent index is an important benchmark measure to assist tenants in deciding which property to chose to live in, and that while it is indeed important to bring down rental costs which had become excessive, it is equally important to recognize that the overall system (property sector) stays bouyant by balancing rental yields to the owner/investor, which takes into acount the service and maintenance costs that the owner pays to the developer, and the repayment that he/she has to make to the bank from the net rental proceeds on annual basis. If the rents fall too much, there will be increasing levels of mortgage defaults which could create another waive of declining property prices.
Posted by Akbar Kazmi, Dubai, UAE on 16 April 2009 at 08:10 UAE time
While rent index is an important benchmark measure to assist tenants in deciding which property to chose to live in, and that while it is indeed important to bring down rental costs which had become excessive, it is equally important to recognize that the overall system (property sector) stays bouyant by balancing rental yields to the owner/investor, which takes into acount the service and maintenance costs that the owner pays to the developer, and the repayment that he/she has to make to the bank from the net rental proceeds on annual basis. If the rents fall too much, there will be increasing levels of mortgage defaults which could create another waive of declining property prices.
it is ridiculous to put such names, is marcel khalifa more powerful than feyrouz, is it Ziad better tha rahbani sons, Marwan... 
