Rents in these Dubai areas have fallen; are you moving in?

As budget-conscious tenants look for cheaper alternatives or downgrade to smaller units to get better value for money, mid-to-high end residential segment continues to witness drop in rental rate while villa rates could come under further pressure on new supply, market experts said (click here for cheap apartments available on rent).

While apartments in Jumeirah Village Circle and Dubai Sports City saw rates increase by two per cent and three per cent, the mid to high end segment saw some downward movement, with Business Bay recording a five decline due to new supply being handed over and budget conscious tenants looking for alternatives, real estate consultancy Asteco said.
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"Although rental rates have remained relatively stable this quarter we are seeing a definite shift to more affordable areas such as Jumeirah Village and Dubai Sports City where rents are cheaper and an increasing number of amenities are coming on line as communities reach critical mass," said John Stevens, Managing Director, Asteco.

With more supply announced and due to enter the market over the next few months, there seems to be little potential for both rental and sales prices growth, except within select developments, sad Stevens.
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According to Chestertons, Dubai rentals declined in the third quarter 2016 after remaining steady in the second quarter with the lease market remaining tenant favourable.

Rents fell between one and two percent in both apartment and villa segment, with two-bedroom units in Downtown Dubai, Jumeirah Lakes Towers and the Greens witnessing the biggest declines.

In the villa segment, Arabian Ranches registered the maximum decline, with an average four-bedroom villa available to rent for Dh245,000 per annum. Rents for villas on the Palm, Jumeirah Village Triangle and The Springs remained steady.

Property portal Bayut.com said average apartment rent in Dubai dropped to Dh125,000 per annum in the third quarter of 2016, down two per cent from the previous quarter.
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Asteco's Dubai Property Review Q3 2016 shows that apartment rental rates in Jumeirah Village ranged from Dh40,000 to Dh55,000 for a studio and from Dh125,000 to Dh165,000 for a three-bedroom unit. In mid to high end areas such as Jumeirah Lakes Towers studios ranged from Dh55,000 to Dh75,000 while three bedroom apartments were available from Dh120,000 to Dh180,000. The high to luxury end of the market with developments such as Downtown Dubai saw studios priced from Dh75,000 to Dh105,000 while three bedroom units varied from Dh175,000 and Dh300,000.

"Given that tenants have a wide range of options to choose from, they are more likely to negotiate with their landlord; and if their requirements are not met, they will vacate. Whilst this was noticeable in Jumeirah and Umm Suqeim, this trend has spread throughout the wider Dubai market," said Stevens.

"With more handovers expected in the next few months, we anticipate villa rental rates could come under further pressure."

In the villa market rents ranged from Dh130,000 to Dh185,000 for a two-bedroom villa in Arabian Ranches, Dh125,000 to Dh160,000 for the same size in Jumeirah Village. In the Springs a two-bedroom villa is priced between Dh130,000 and Dh145,000, for a three bedroom the cost varies from Dh165,000 and Dh220,000.

Villas in Jumeirah and Umm Suqeim recorded a significant year-on-year decline of 19 per cent and 12 per cent respectively, which was attributed to substantial new supply and an increasing number of budget-conscious tenants.

According to Reidin, sales transactions were down by 22 per cent compared with second quarter 2016 and with many off-plan property launches at competitive rates, there is a possibility that developers could face some pressure in the near future. A significant increase in activity in the area closest to the new airport was recorded in the last few months, such as the launch of Emaar's Urbana at Emaar South and various projects in Dubai South.

"Most of these recent releases had significantly lower asking prices compared with current market prices as developers expand into the affordable segment, by reducing unit sizes and launching projects in secondary locations," said Stevens.

After dropping nearly 20 per cent year-on-year, sales rates for apartments in Dubai Marina remained stable and it was a similar picture for DIFC, The Greens and JBR.

"With ample options available in the market, at various prices and attractive payment plans, buyers have significant choice. They also appeared to be better informed compared to previous years, as they researched their options, pricing, payment plans and developers' track record," said Stevens.

issacjohn@khaleejtimes.com

• Dubai