The cost of renting in Dubai has fallen by up to a third in the last eight weeks, agents said on Tuesday, as homeowners flood the leasing market amid a lack of buyer demand.
Research by Arabian Business has revealed that following Dubai’s six year property boom, rents for villas and apartments have plunged up to 33 percent in some of the city’s most prestigious locations including downtown Burj Dubai and the Palm Jumeirah.
Nehad Abdelhamit, leasing consultant for broker Dubai Waterfront Properties said annual rents for two-bedroom villas in the Springs had slid from AED220,000 to AED150,000 in the last two months - a 32 percent drop.
On man-made island the Palm Jumeirah, Abdelhamit said some of the biggest seven-bedroom 'signature' villas were 33 percent cheaper to rent now, with prices falling from AED1m to AED670,000 over the last couple of months.
“Most of the properties are not selling, so they are renting them instead to secure an income. People have got mortgages to pay,” she said.
Louise Pitt, director of leasing at broker Landmark Properties also said two-bedroom villas in the Springs have come down from AED 190,000 a year to around AED 135,000 a year in just six weeks, with the same sized properties in the Meadows seeing similar falls.
Rents are now falling in Dubai due to lower demand and increased supply as appetite for real estate in the Gulf’s tourist and business hub has suffered due to the global crisis.
There is growing evidence that apartments are becoming cheaper to rent as well.
Farida Khan, a leasing consultant also at Dubai Waterfront Properties said two-bedroom apartments at developer Emaar’s flagship Burj Dubai project had tumbled in price from AED250,000 to AED170,000.
“There is so much stock available and much less demand,” she said.
In a report published on Tuesday US bank Morgan Stanley said rents in Dubai were down seven percent in December from a peak last summer, while the cost of renting villas had declined 10 percent.
Last month property services firm Asteco said rents in Dubai and Abu Dhabi were flat in the final quarter of 2008.
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