Residential rental rates in Dubai slumped 41 percent in 2009, according to the latest quarterly report released on Wednesday by real estate consultants CB Richard Ellis (CBRE).
The report noted that tenants are taking advantage of changing market conditions, and that landlords are now offering “rent free periods, inclusion of service charges, and multiple cheques”.
“Prices are still holding in the historic residential areas of Bur Dubai and Karama compared to the newer residential districts such as Al Barsha,” the report added.
Office rental rates also declined dramatically, CBRE said. Excluding the Dubai International Financial Centre, average rents ranged from AED1,950 to 2,400 per sqm per annum in the fourth quarter of 2009. This represents a year-on-year decline of 57 percent.
“The real estate market remained sluggish during the final quarter of 2009 with few signs to suggest any imminent upturn in fortunes,” the report said.
CBRE added that in some locations outside the central business district vacancy rates were now more than 30 percent. The drop in rental rates and the rise in vacancy levels can be attributed to the increase in supply, the report said.
In total 580,000 square metres of new office space entered the market in 2009, with more than half of this new supply in DIFC, Dubai Silicon Oasis, Jumeirah Lakes Towers and TECOM.
Last month, Colliers International released its 2009 Q4 report and found that quarterly house prices in Dubai rose one percent, year-on–year prices had fallen 42 percent and had returned to the same levels seen in Q2 2007.
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