Dubai tenants continue to have bargaining power

Jumeirah Beach Residence experienced a decrease of three per cent in sale price per sq ft in Q2 of 2016.

The second quarter of 2016 witnessed only a mild decline in Dubai house rents while sale prices of residential property are close to bottoming out, according to a report issued by classifieds website Dubizzle.

There has been an overall slowdown in the decline of Dubai house rents so far this year and it is close to bottoming out. However, tenants still enjoy a slightly upper hand in negotiating power.

Ann Boothello, senior product marketing manager for property at dubizzle, said: "Rents are now in the phase of bottoming out. Tenants still have the upper hand with more negotiating power. Landlords are marketing their properties at more competitive prices and agreeing to three or four cheques to avoid having vacant properties."

Dubizzle witnessed a decline in rents of two per cent for one- and two-bedroom apartments since Q1 2016, whereas no change was recorded for three-bedroom apartments.

Meanwhile, Dubai's residential sale prices remain unchanged in Q2, suggesting the market has levelled off or is bottoming out.

"Sale prices have decreased since mid-2014 when they had reached their peak. The residential property sale price cycle is almost at a close as we have not witnessed any major shifts in pricing from Q1 to Q2 2016," added Boothello.

Dubizzle's report revealed that Jumeirah Village Circle (JVC), Jumeirah Beach Residence and Al Barsha experienced a decrease of three per cent in sale price per sq ft each.

The most searched communities to buy in Q2 were Dubai Marina, Jumeirah Lakes Towers and JVC.

For those of you looking to buy office space, Downtown Dubai was identified as the most expensive area to buy with an average of Dh2,850 per sq ft while Dubai Silicon Oasis ranked as the lowest priced at Dh669 per sq ft.

Craig Plumb, head of research for JLL Mena, said: "The Dubai market is now stabilising near the bottom of the current cycle with more attention now shifting to when the market will recover rather than how much further it will fall. The Abu Dhabi market is at an earlier stage of its downturn, with Q2 seeing early signs of a softening in both rents and sale prices."

Abu Dhabi rents to drop more
The capital experienced a decline in property rents, with prices of one-, two- and three-bedroom apartments decreasing by two, one and four per cent respectively compared to Q1 2016. Three-bedroom apartments in Abu Dhabi Corniche and Sadiyaat Island experienced the biggest drop by 11 per cent and 15 per cent, with annual rents at Dh160,000 and Dh220,000 respectively.

Dubizzle said the cost of living has increased in Abu Dhabi due to the economic climate, especially with the recently-introduced three per cent municipality fee and a decline in salaries in industries that are cost cutting - predominantly in the oil and gas and hospitality sectors. Dubizzle predicted a continued decline in rents in Q3 2016.

"Families in Abu Dhabi will consider downsizing as they are having to budget better and relocate to smaller, more affordable units. This will put further pressure on rents over the next two quarters," added Boothello.

The most searched community in Abu Dhabi was Al Reef, followed by Tamouh Marina Square and Al Reem Island.

Property sale prices saw a decline of three per cent compared to Q1. Sadiyaat Island experienced the largest drop at seven per cent, followed by Al Reem Island at four per cent.

- deepthi@khaleejtimes.com
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