KT special: Abu Dhabi, Dubai rents are falling in these areas
Dubai - If residents haven't felt the change yet, experts said that's because the full impact of the pandemic has just started sinking in.
In the face of challenges the pandemic has brought, a certain market trend has emerged as a silver lining: Housing rents are falling in the UAE. And realty experts believe this will continue towards the end of the year and run into 2021.
If residents haven't felt the change yet, experts said that's because the full impact of the pandemic has just started sinking in.
In Dubai, according to the data available, the average apartment rents fell by about four per cent quarter-on-quarter and over nine per cent year-on-year, across all areas.
Motor City, Sports City and Dubailand saw the sharpest quarterly dip in average rents. On the other hand, apartment rents in International City, Jumeirah Lake Towers and DIFC held steady for the second consecutive quarter.
In the villa segment, rents saw a more moderate decline of about 2.5 per cent quarter-on-quarter and just over seven per cent year-on-year.
The steepest rental rate drop was witnessed across Springs, Meadows and Arabian Ranches, while Jumeirah Islands, Palm Jumeirah and The Lakes-Emirates Living saw the lowest annual declines.
With the dip in prices becoming more noticeable, people have started moving. Some cut down on expenses and relocate to cheaper areas, but then there are also those who are making the most of the drop by upgrading to bigger homes.
Chirantan Joshi, CEO at Emovers, said: "We have seen movements both ways. Some are downsizing, but some are moving to bigger houses because they are more affordable now. There are great rental deals available in the market and this has increased the overall movement. Dubai Hills area is in great demand these days."
Joshi shared that although the pandemic slowed down the business in April and May, it never stopped completely.
"Even during the Covid-19 outbreak, we had a few moves, especially for people who had already informed their landlords about their move-outs. After May, moving activities increased, and we think it was because of the backlog during the pandemic. Now it has stabilised and the numbers look similar to last year's September."
In Abu Dhabi, on an average, there is a one to two per cent difference between rents in the first two quarters of the year, but a comparison with the same period last year reveals 'startling' figures, experts said.
Big movement is seen in Corniche and Marina Square, where rents for high-end apartments have plunged by 15 and 10 per cent compared with the same period in 2019.
A second quarterly report by Asteco, a leading real estate services provider, revealed that the apartment rents in the central part of the city - a popular spot among expatriates - had dipped by six per cent for low-end properties and five per cent for high-end properties, when compared to the same quarter in 2019.
For apartment rates in the comparatively posh areas of Khalidiya, Al Bateen and Corniche, the drop ranged from three to six per cent for low-end properties and four to even 15 per cent for high-end properties. Rates for three-bedroom apartments range from Dh65,000 to Dh95,000 for low-end properties and Dh115,000 to Dh170,000 for a high-end ones.
"We see apartment rents continue to decline. The high-end apartments are holding value a little bit better but mid- and low-end are suffering because of the job losses at the moment," said Ben Crompton, managing partner at Crompton Partners Estate Agents.
According to Asteco, villa rates have seen a maximum of one to two per cent movement in the past six months and up to six per cent slip when compared to the second quarter of 2019.
Three-bedroom villas in Khalidiya, Al Bateen, Mushrif, Al Karama, Nahyan Camp, Al Raha Gardens, Golf Gardens, Khalifa City and Mohamed Bin Zayed City range between Dh100,000 and Dh160,000. While three-bedroom villa properties in Al Raha Beach and Saadiyat Beach can reach Dh165,000 and Dh260,000, a three-bedroom villa on the mainland is priced between Dh125,000 and Dh160,000.
Price drop to continue
Another expert said rents for apartments are expected to fall further.
Elaine Jones, executive chairman of Asteco, said: "With an increased probability of business downsizing and potential job losses, there is a high risk that demand for real estate - rental and sales - will weaken further.
"This potentially sharp drop in decline is set to coincide with the continued delivery of pre-pandemic committed supply. As such, significant corrections in values - rents in particular - during the second half of the year and into 2021 are likely."
WHAT IF YOU CAN NOW AFFORD A VILLA...
If you find out that you can now afford to live in a villa, would you leave your flat? A number of residents did.
Dinesh Krishnan, who lives in Abu Dhabi with his wife and three kids, was among those who recently bid apartment living adieu.
"I was paying Dh66,000 for a two-bedroom apartment, but I now moved to a villa in Khalidiya area, where I have taken a portion of a villa for Dh60,000," Krishnan said.
"I have spacious rooms, more storage areas, and two balconies in each bedroom, and a mango tree with chirping birds evokes nostalgia every morning."
Ben Crompton, managing partner at Crompton Partners Estate Agents, also found that residents have been moving from high-end apartments to villas, even in places where prices stayed the same.
"What we are seeing is a huge interest in villas, but rents in villas have either stayed stable or actually increased over the last six months. More people are moving out of high-end apartments where they don't have a balcony, I presume, to somewhere they have a garden so kids have a place to play," he said.
Some of the popular locations residents check out are Saadiyat Island, Yas Island and Al Raha Garden, he added.