Time to relocate? Rents in Dubai have become more affordable now
Supply of new properties also stayed strong even during the pandemic times.
Residential rents in Dubai, which have dropped 43 per cent since their peak in the second quarter of 2014, will continue to decline in the next six to nine months due to a sustained supply of new units in the months ahead, say real estate industry consultants.
Data from consultancy Asteco showed that rents fell 13 per cent year-on-year in the third quarter, led by the Dubai Sports City and Business Bay areas. Supply of new properties also stayed strong even during the pandemic times as 8,650 apartment and villa units were handed over in the third quarter. This trend of high supply will continue in the fourth quarter as another 8,450 units will be made available in the fourth quarter, according to Asteco.
Around 14,400 were handed over in the first half of 2020 while second-half handovers will reach 17,100.
“Despite prolonged economic pressure, the rate of decline is still broadly aligned with previous quarters and Asteco anticipates similar drops for the next six to nine months with a chance of rental declines slowing down in the second half of 2021,” Asteco said in its third-quarter report.
It said the drop in rentals was most prominent in Dubai Sports City, falling 17 per cent followed by Business Bay (-16 per cent), Jumeirah Village (-14 per cent), Downtown Dubai (-14 per cent), Dubai Marina (-13 per cent), Jumeirah Beach Residence (-13 per cent) and Deira (-13 per cent). The emirate’s residential sector witnessed an average drop of 13 per cent year-on-year in the last quarter.
Sailesh Israni, managing director of Sun and Sand Developers, said rentals have stabilised and they are at fair prices. “People move to new areas when new inventory comes in and some areas see a correction, which is natural. There is flexibility that landlords are offering. Sometimes people are not opting for a one-year contract and rather go for six- or three-month contracts,” said Israni.
He said people were finding it comfortable earlier to share joint accommodations, but now with overall rents going down, priorities have changed. With work from home policies in place by some companies, people are more keen to maintain their social distance for safety purposes.
“Now with work from home policies, people are happy to spend more on housing and reduce on other luxuries like eating out, new mobile phones and clothing. All that has changed because social interaction is a little less,” he added.
Citing an example, he said earlier, when a new engineer used to come to Dubai with a Dh6,000 salary, he lived in a sharing accommodation; now, such professionals are preferring independent or shared apartment with only a single person.
“We have been witnessing a very stable outlook since July 2020 when residential rental demand is back to normal. Even during the pandemic, we did not see it down, especially for villas because people want more space and freedom with their families,” said Imran Farooq, chief executive officer of Samana Developers.
“In addition,” he added, “the economic rebound all over the country has started, especially after reopening airports and restarting tourism activities, which increased the demand for holiday homes too.”
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