Rents for luxury apartments in Dubai’s Burj Khalifa, the world’s tallest tower, have been slashed by as much as 40 percent after the owners failed to find tenants, according to a broker that’s marketing the homes.
The cost of renting a studio with floor-to-ceiling windows, marble and wooden floors has dropped to 6,666 dirhams ($1,815) a month, while a one-bedroom apartment is available for AED10,000, Better Homes said. Two-bedroom homes are going for 15,833 dirhams.
Nine months after Burj Khalifa was inaugurated with a water-and-firework display, about 825 of the tower’s 900 apartments remain unoccupied, said Laura Adams, a residential sales and leasing adviser at Dubai-based Better Homes. The building is within walking distance of The Address, which offers serviced apartments at similar rates.
“It was clear they wouldn’t move at market prices as they were competing with the Address next door,” Adams said in an e- mailed response to questions. The Address is operated by Emaar Properties PJSC, the company that built Burj Khalifa.
Owners of apartments at Burj Khalifa also pay an annual service charge of 53 dirhams a square foot for the maintenance of communal areas such as gyms and swimming pools, Adams said. Her company is helping to find tenants for about 20 percent of the apartments.
Emaar sold 90 percent of the homes in the tower before the January opening. The building also has 144 Armani-branded residences, 37 floors of office space and 160 hotel rooms. It houses Armani’s first hotel and an observation deck on the 124th floor.
During the five years of construction, Dubai went from the world’s best performing property market to the worst. The collapse of global credit markets led to price declines of more than 50 percent and the cancellation of nearly half of the real- estate projects planned in the emirate.
Apartment prices in the tower have fallen to less than half. They are now selling for no more than 3,300 dirhams a square foot, 67 percent less than the 10,000 dirhams at the 2008 peak, according to Landmark Advisory, a Dubai-based property adviser.
“These rents make sense, especially since rents in Dubai have been declining over the past two years,” said Jesse Downs, director of research at Landmark.
“I don’t think we will see the premium for the world’s tallest tower until occupancy levels increase,” Downs said.
Potential tenants may also be lured by the apartments’ smart home-entertainment technology, wine coolers with recessed and dimmable lighting and the access to the tower’s “Sky Lobbies,” which houses gyms, indoor and outdoor swimming pools, Jacuzzis, a library, Cigar Club and convenience store.
“Rents are low at the outset in most buildings because it isn’t attractive for a tenant to move into an empty tower,” Downs said. “At the market peak, people were renting in Jumeirah Lakes Towers for that much. It goes to show how much the market has changed here, but that isn’t necessarily permanent.” (Bloomberg)
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