Average rents in upmarket neighbourhoods in Dubai plummeted by up to 12 percent last year, according to a new analysis of rental figures based on price per square foot.
Rents in Arabian Ranches and Jumeirah Beach Residence (JBR) dropped by 12 percent over the past year, while rents in areas such as Dubai Marina and the Palm Jumeirah fell by 8 percent, according to exclusive research by the Better Homes real estate agency for Arabian Business.
The firm analysed its own data to provide a picture of declining rental rates across much of Dubai.
In Arabian Ranches, the average rental price per square foot in 2014 was AED75 ($20.4), while in 2015 it dropped to AED66. In JBR the average price per sq ft in 2014 was AED90 whereas in 2015 it was down to AED80.
Dubai Marina average rental price per sq ft was AED137 in 2014; this dropped to AED127 in 2015, and on the Palm, where apartments are typically larger, it was AED115 in 2014 and AED106 in 2015.
Motor City, Jumeirah Lakes Towers (JLT) and International City all saw average rent per sq ft drop by 7 percent, and Downtown Dubai saw a 6 percent drop.
Meanwhile, average rents in International Media Production Zone (IMPZ) bucked the trend and increased slightly, by 1 percent, as prospective tenants sought to save money by moving to newbuild neighbourhoods further out of town.
Last week, Dubai’s Real Estate Regulatory Authority (RERA) published its new rental index for 2016, showing rental price drops across much of the emirate.
However, its calculations were based on average market rent ranges for entire units in each area per annum, not according to price per square foot. Units vary in size and price according to neighbourhood – with Downtown Dubai and Dubai Marina having some of the highest prices per sq ft in the market.
Ryan Mahoney, CEO, Better Homes, said: “Overall, rental rates clearly fell over the last 12 months, which is good for tenants, and it’s likely this trend will continue. These are not massive falls but instead slow incremental reductions in rental rates as we see more properties completed.
“With the exception of the Arabian Ranches, we measured the most popular room configurations for apartments. Not surprisingly Downtown and Dubai Marina have some of the highest per square foot prices in the market while IMPZ and International City offer some of the lowest.
“Interestingly IMPZ prices did not actually fall and seem to be holding firm as it becomes an increasingly popular community; and, in challenging economic times people gravitate to more cost effective accommodation.
“Some of the biggest price changes were JBR and Arabian Ranches where rents fell over 10 percent and Motor City apartments offer a price per square foot comparable with International City, which may surprise some residents.”
The RERA index also showed that rents had come down in areas including Dubai Marina, JBR, the Palm and Downtown Dubai, but by a maximum of 5 percent. One-bed apartments in Business Bay, however, saw the steepest declines, of up to 11 percent, according to RERA, while two-bedroom apartments in JLT and Business Bay, saw rental price drops of up to 8 percent.
Bayut.com’s UAE Market Report 2015, published this week, noted that “restrictive measures” enforced in 2013 – including a hike in property registration fees and mortgage caps – contributed to a slowdown in the overall real estate market in Dubai, as well as an “amplified forecast of unit supply in 2015 – 25,000 [new units] to be precise”.
Bayut.com’s report said two-bed and three-bed apartments posted 4 percent and 2 percent declines in average annual rents in December 2015 compared to the same month in 2014. But the major hit was taken by the 4+ bed category, where average rents fell by over 12 percent in December 2015. One-bed apartments, however, registered a 6.6 percent increase over the same month in 2014, the report said.