By Ed Attwood
Studio rents in Nakheel project drop to more than 50% below RERA’s initial rental guide
Rents in the International City area of Dubai have slipped below AED15,000 a year for the first time, as prices in Dubai’s battered property market continue to fall.
Several studios in the Nakheel development are available for as little as AED14,000 a year, although most landlords require potential tenants to pay the full amount in a single cheque.
A series of studios measuring 455 sq ft in size are listed in many of the development’s clusters, including England, China, Italy and Greece.
The prices are more than 50 percent lower than the AED30,000-35,000 bracket recommended in RERA’s first Dubai rental index, published in October 2009.
Dubai, the worst-hit property market in the Gulf, saw house prices more than halve in late-2008 as the financial crash wiped out project funding and brought a halt to its real estate boom.
Nakheel was one of the biggest casualties of the crash, suspending at least 100 projects in the wake of the downturn.
Earlier this month, real estate consultancy Asteco said that rents in International City had fallen by four percent in the second quarter of the year.
The drop was worse in Discovery Gardens, also developed by Nakheel. Asteco said that rents in the development near Jebel Ali had fallen by 11 percent in the last three months.
Both projects have suffered lower values as depressed prices elsewhere in Dubai have led renters to move to other locations.
International City residents have long complained about poor infrastructure, the lack of sufficient access to the development, and the proximity of a nearby sewage processing plant.
Last week, there was some rare good news for International City, when Rufi Real Estate handed over a new residential apartment building in the project’s business district.
The $30m 10-floor Rufi Gardens block is one of a series of projects that the developer is planning to release onto the market in the next two years.
Properties when compared to all developed nations are still high even to rent.....Forget about comparing to buy, it dosen't make sense at all. 3 times higher than them! Either the folks here want something in their dreams or do expect a lot from the public. It all boils down to the mass number of people investing here in Dubai. I love this place for many reasons but this is actually killing all bit of it. There is no vision for any long term plans from any quarter and expats who will come here will earn and obviously save all their hard earned money back in their home country or somewhere else they feel their rights will be protected as an investor.
That is p-ositive in its own way, International City at that price will entice more current commuters from Sharjah to Dubai, as long as the A/C keeps working, and sewage and domestic waste disposal are still functional. No rodents or insect infestations. Exactly what Dubai needs to house lower paid workers as is Discovery Gardens. That's the segment of the market they were built to address and the way they should be priced.
However, with new properties arriving every day rentals are becoming almost as cheap for larger floorspace properties in less accessible areas, rentals in isolated Dubailand for example are definitely 20% lower than other districts. I've communicated with a number of agents who now embrace Dubailand and they concur.
As an afterthought, there are those that say a studio may yet reach AED 12,000 pa, dependent on maintenance standards and level of faults.
The situation at International City is 100% Nakheel's fault. International City is a dump and has gotten a bad reputation, not really the original vision Nakheel described for all the buyers. International City has never been properly maintained and within a few years will be the newest "slum" in Dubai...nothing to be proud of!
Let's face it, with the perception that International City has, it is never going to attract the level of resident it was hoping to. A friend who used to live there woke in the middle of the night to the police knocking on the door, with a blood splattered common corridor. Respectable people are too scared to live there for fear of being caught up in the 'gang' mentality which seems to have pervaded it. Shame really, cause the concept was a lovely one.
I would like to write about international city that Nakheel is very poor company for management, they left all building without any rule and they made it as it's built before 15 years, no body care about building and they asking us to pay a high service fee and Municipality also asking us to pay 5% tax. last I want to say that International City is parking plce for trucks and trailers
I may take one if they PAY ME 14,000 per year !
Where is RERA when the rents are declining? How come they haven't updated the listing of rents in different areas of DXB? I know why... RERA has no teeth to change/enforce anything. RERA definitely needs to update the rents for DXB since it's been almost 2 yrs since the last update. A lot of landlords still refer to the Rental Index to increase the rents, for their advantage.
In International City and you can find the bachelors packed as many as 12 persons in a 1 BR apt. Restrict the no. of bachelor occupants in a 1 BR to 4 persons & there would be demand for the empty apartments. Last year in Sept (2010) I saw an apartment where my junior colleague stayed with his friends working in another company. That 1 BR in the Persian Cluster of International city provided by the company had accommodated 24 persons. The tenancy contract might have been agreed for 6 persons but later nobody checks the no. of inmates. The inmates bring their relatives & friends in to their apartment with out the knowledge of employer for some extra earning. Everybody knows that in Satwa, Karama, Deira certain nationalities stay packed in apartments & villas making partitions, both male and female together. With no electricity and suffering the traffic, why people working in Dubai prefer to remain in Sharjah? There is solution for the empty apartments of Dubai but nobody bothers.
I am owner of one the apartment in International City, fine if Nakheel wants to bring down the rent, but they should bring the yearly maintenance charges DOWN too!
We the owners have no protection at all....the flats what we bought has lost its value in half again nakeel offering flats at cheaper to compite with us will almost drain us!!