Dubai Property Rents Plummet: Study

DUBAI — Dubai rents have fallen sharply in the last two months, with going rates for some real estate ranging from basic studios to luxury flats on the man-made Palm Jumeirah falling by almost a third, a property consultancy said.

By (Reuters)

Published: Fri 15 May 2009, 11:49 PM

Last updated: Sun 5 Apr 2015, 9:45 PM

Landmark Advisory said rents have fallen as much as 50 per cent in some areas since peaking late last year, with average declines of 10 to 30 per cent depending on the neighbourhood.

Between March and May, rents on studio flats in Dubai Marina, an upmarket district dominated by white-collar workers, fell 23 to 28 per cent to between Dh40,000 ($10,890) and Dh65,000 per year, data from Landmark showed.

Rents in Dubai doubled or more during a building boom that came to an end late last year after the financial  crisis hit.

“We expect an additional dip in the summer with the anticipated departure of groups of Dubai residents,” Jesse Downs, Landmark’s director of research and advisory services, said late on Wednesday. “We’re definitely seeing more supply coming online and a population declining in Dubai.”

A Marina studio now costs $907-$1,475 a month, down from $1,180-$2,043 a month in March.

Dubai Marina rents have fallen an average of 23 per cent from the third quarter to the end of April, while in nearby Jumeirah Beach Residence, prices have declined 19 percent, Downs said.

Renting a two-bedroom flat on the Palm Jumeirah, an island shaped like a palm frond and visible from space, was 14 to 33 per cent cheaper in May than it was in March. That puts annual rent at between Dh120,000 and Dh175,000, or $2,723-$3,972 a month in May compared with $3,178-$5,901 in March.

Renting a one bedroom flat in the Greens, a medium-income housing complex, also fell 25 per cent to a lowest price of $1,362 per month, Landmark said.

Rising house prices were a main driver of inflation in the UAE in recent years, with price rises peaking at a 20-year high of 13.6 per cent in 2008,  economists say.

The pace of declines in rents, as well as lower food costs, has led many economists to slash their 2009 inflation forecasts. “The very rapid expansion in demand that pushed rental prices up so sharply in 2007 and 2008 has come to an abrupt halt,” said Simon Williams, regional economist at HSBC, who forecasts UAE inflation will fall to 5 per cent this year.