Property rents in the UAE’s battered real estate market will hit bottom in 2012 with lease levels showing signs of an uptick in 2013, said property broker Jones Lang LaSalle.
The Gulf’s worst-performing real estate market will “peak” in terms of its sliding rents over the next 12 months, despite the estimated 38,000 units due online in Dubai in 2012, said Alan Robertson, CEO of JLL in the Middle East.
“The rental market has generally performed better than the sales market during 2011, with asking rents having stabilised and now improving,” the company said in a report published on Sunday.
Villa rents increased 11 percent in the fourth quarter, compared to the previous three-month period, and were 16 percent higher than the year-earlier period, JL said.
Apartments, which made up 90 percent of new stock in 2011, saw a three percent rise in rents in the fourth quarter, and were only marginally down on the year-earlier period.
Oil-rich Abu Dhabi will also see property rents steady but is unlikely to see the same price climb as Dubai amid a pipeline of 28,000 units due online this year, JLL said.
“Due to the significant development pipeline, rents will continue to experience downward pressure. This will help decrease the rent premium that Abu Dhabi has maintained over Dubai to date,” the report said.
The news was negative for house prices, however, with JLL forecasting an ongoing decline in rates, particularly among apartments in Dubai.
Average prices fell nine percent year-on-year to AED 8,960 per sq m in Q4 2011, with flats in Burj Dubai Downtown and Dubai Marina absorbing falls of around 11 percent.
Though the UAE will see an increase in property transactions over the next year, driven by private and wealthy buyers rather than institutions, this won’t translate into a spike in house prices, JLL said.
“Lower prices, more choice of higher quality product and its role as a regional safe haven will increase the attractiveness of the UAE market to both occupiers and investors in 2012,” the report said. “We can expect ‘more’ positive signals from this year, with some of the key words being affordable housing… new realism, tenant friendliness and sustainability across the UAE real estate market.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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