Dubai apartment rents drop 3% on new supply

Abu Dhabi - The majority of the new supply was added along the Sheikh Mohammed Bin Zayed road, with the International Media Production Zone (IMPZ) area accounting for 26 per cent of the total supply.

Dubai residential rents declined by three per cent during the second quarter of 2015, according to the latest ADIB/MPM Properties Real Estate report. This comes amid a surge in supply as 6,750 new residential units were delivered this quarter, taking the total Dubai residential stock to 479,000 units.
The majority of the new supply was added along the Sheikh Mohammed Bin Zayed road, with the International Media Production Zone (IMPZ) area accounting for 26 per cent of the total supply.
Capital values for completed apartment units fell 3.5 per cent quarter-on-quarter, with averages sales prices in Business Bay witnessing the biggest fall of five per cent.
"The volume of new projects in the Dubai market means that properties will increasingly need to appeal to potential buyers' sense of value," said Paul Maisfield, CEO of MPM Properties, the real estate advisory subsidiary of Abu Dhabi Islamic Bank (ADIB).
"That means a shift towards well managed, self-contained and mid-market properties, particularly close to the Expo 2020 site. We are also seeing a greater emphasis on buyer incentives and unique selling points, especially in the luxury segment, and expect buyers to benefit from these trends."
Dubai's office sector continues to perform steadily despite a substantial rise in new supply, with capital values remaining broadly stable. An additional 2.5 million square feet of new office space is forecast to enter the market by the end of 2015, with the majority of this supply being delivered by a small number of developers or investors. Meanwhile, Dubai's prime retail sector continues to perform well with healthy footfall from Dubai's residential population and tourists from GCC countries, China and India.
Average prime rental rates increased 6.4 per cent in Q2 as new retailers struggled to find space in prime retail centres.
The hospitality sector saw over 1,200 hotel and hotel apartment rooms added during the second quarter, with the majority added within the Business Bay area (68 per cent).
The impact of the drop in Russian tourists has largely been felt across the luxury segment of the market; however, double digit growth in tourist numbers from India, China and other African countries has kept the budget segment stable.
- business@khaleejtimes.com