Residential rents in Dubai, where the majority of the population is foreign, declined the most on a monthly basis since the property peak of two years ago, according to Phidar Advisory.

“Landlords are finding it more difficult to rent homes, especially larger and more expensive ones,” Jesse Downs, managing director at Phidar, an advisory firm specialising in real estate, told Bloomberg in a phone interview on Sunday.

That is mostly due to “recent job losses and a decline in job growth rates”.

Home rents dropped 1.3 per cent in May, the biggest drop since May 2014, Downs said. Since the peak, home rents fell at a compound monthly rate of 0.3 per cent.

The acceleration in the rental decline is a sign that further weakness in home rents and prices is still ahead, Downs said.

Dubai is experiencing a delayed economic impact to the collapse in oil prices that has led some companies to reduce spending and trim their workforce.

Many of those who lost their jobs, such as some banking and oil services employees, chose to remain in the city until the end of the school year, she said.

While confidence in the economy and clients’ willingness to spend improved in May compared with previous months, employment growth was modest, according to an Emirates NBD Dubai Economy Tracker Index published on June 9.

Firms continued to cut prices in order to secure new work even as costs rose, putting profit margins under pressure, according to the report.

The lower limits of asked residential rents dropped by 4.1 per cent by the beginning of June compared to the same week in the previous month, stated Downs.

“This is a significant shift in rent trends and is an indicator the housing market is about to get significantly more affordable,” he added.-Bloomberg