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The highest drop in rental rates was seen in Dubai’s freehold
developments.

Dubai rents dip for first time in three years

DUBAI, September 21, 2014

After registering growth for 10 consecutive quarters, average residential rents in Dubai, UAE, dipped marginally by one per cent during the third quarter of this year, according to a report.

The percentage drop, however, has been higher for some individual developments, stated global property consulting firm CBRE in its 'Dubai MarketView for Q3 2014.'

The highest falls were noted within Dubai’s freehold developments, while rental rates across leasehold areas remained more stable with few areas still registering an increase, said the report.

Within the freehold developments, rental rates in Downtown Dubai, Tecom C and International Media Production Zone dropped by an average of three per cent, while Palm Jumeirah, Business Bay, International City, Jumeirah Lakes Towers, Motor City and Dubailand Residences have seen around two per cent drop in rents.

"Rental declines, however, were not universal across all freehold developments. Developments such as the Greens and Dubai Marina have witnessed stable rental rates during the quarter," explained Mat Green, the head of research and consultancy UAE, CBRE Middle East.

"The dip in rentals has been attributed to an increase in new residential stock combined with weaker demand during the traditionally slow festive and holiday period," he noted.

On a year-on-year basis, the average villa rents witnessed a single digit growth of around eight per cent. However, the notable rise in new villa stock over the past 18 months has restricted rental inflation within the segment, said the CBRE in its report.

“Smaller villa units of two- and three-bedroom sizes, which are popular amongst new job entrants, registered an increase of 12 per cent and 11 per cent, whilst larger five- and six-bedroom villas registered just a modest single digit growth. During the same period seven bedroom villas witnessed a similar marginal increase of around three per cent,” added Green.

According to CBRE, while the rental market experienced a slight blip in performance, the sales market maintained some momentum, albeit at a slower rate compared to previous quarters.

Overall, average sales prices increased by around three per cent quarter-on-quarter, bringing the annual growth close to 23 per cent. The best performing segment of the market during the quarter was found to be high-end apartments, a trend that was also visible in buying patterns with prime areas such as Dubai Marina and Palm Jumeirah seeing the majority of transaction activity.

In the short term around 19,000 new units are expected to enter the market during 2015, with a large portion of these (29 per cent) expected from the Dubailand development, said the CBRE in its report.

The expected new supply across the emirate should help to keep rental inflation in check, controlling the spiralling cost of living that has seen rents jump close to 50 per cent during the past two years.

The Dubai office market is experiencing rising demand with new requirements reflecting the improving state of the sector, overall business confidence and positive sentiment as a result of Dubai Expo 2020, it added.

"Most of the new enquiries over the past six months have emanated from occupiers looking to upgrade, expand and consolidate in to more centralised locations. The freezone areas which are an important part of Dubai’s office market continue to record healthy occupancy levels," said Green.

Office buildings managed by individual freezone authorities of Dubai International Financial Centre, Jebel Ali Free Zone, Tecom and Dubai Airport Free Zone are currently witnessing vacancy levels of less than five per cent,” he added.-TradeArabia News Service
 




Tags: Dubai | rents | CBRE | residential |

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