By Staff writer
New Asteco report says budget conscious tenants are relocating to cheaper communities to get better value for money
Increasing pressure is being placed on landlords in Dubai as budget conscious tenants continue to place emphasis on downgrading to smaller units or relocating to cheaper communities to get better value for money, according to a new report.
The latest Dubai Property Review Q3 2016 report by real estate consultancy Asteco showed that apartments in Jumeirah Village Circle and Dubai Sports City saw rates increase by 2 percent and 3 percent respectively.
It said the latter also recorded the highest growth over the year, averaging 13 percent as demand for affordable housing increased.
The report added that the mid to high end segment also saw some movement, with Business Bay recording a 5 percent decline due to new supply being handed over and budget conscious tenants looking for alternatives.
John Stevens, managing director, Asteco, said: “Although rental rates have remained relatively stable this quarter we are seeing a definite shift to more affordable areas such as Jumeirah Village and Dubai Sports City where rents are cheaper and an increasing number of amenities are coming on line as communities reach critical mass.”
In the villa market, rents in Jumeirah and Umm Suqeim recorded a significant year-on-year decline of 19 percent and 12 percent respectively, which was attributed to substantial new supply and an increasing number of budget-conscious tenants.
Stevens said: “Given that tenants have a wide range of options to choose from, they are more likely to negotiate with their landlord; and if their requirements are not met, they will vacate. Whilst this was noticeable in Jumeirah and Umm Suqeim, this trend has spread throughout the wider Dubai market.
“With more handovers expected in the next few months, we anticipate villa rental rates could come under further pressure.”
According to Reidin, sales transactions were down by 22 percent compared to Q2 and with many off-plan property launches at competitive rates, there is a possibility that developers could face some pressure in the near future.
Stevens noted: “Most of these recent releases had significantly lower asking prices compared with current market prices as developers expand into the affordable segment, by reducing unit sizes and launching projects in secondary locations.”
After dropping nearly 20 percent year-on-year, sales rates for apartments in Dubai Marina remained stable and it was a similar picture for DIFC, The Greens and JBR, according to the report.
“With ample options available in the market, at various prices and attractive payment plans, buyers have significant choice. They also appeared to be better informed compared to previous years, as they researched their options, pricing, payment plans and developers’ track record,” said Stevens.