Good News: Dubai rentals continue to DECLINE!
Whether you’re a long-term resident or a newbie to Dubai, we have some good news. Rent in Dubai continued to decline in the second quarter of the year due to the rise in residential projects entering the market in the future.
Phidar Advisory’s research note on 2015’s second quarter showed that prices continued to decline compared to the first quarter. The report also highlights income specific supply-demand imbalances.
The most vulnerable segment is housing supply with current annual rents of Dhs100,000 to Dhs160,000 per annum, which could be oversupplied by up to 40 percent in five years.
Jesse Downs, managing director of Phidar Advisory, stated: “If we consider only under construction and launched projects, the majority of the development pipeline is justified due to sufficient total demands, however overbuilding in the mid-high income segment will likely increase competition and lead to supply reordering.”
"There is an opportunity to reposition upcoming products to meet the city's anticipated housing needs," Downs said. "If current announcements convert into launches, the probability for instability by 2020 will increase significantly."
Apartment lease rates have decreased by 2.5 percent and sale prices also decreased by 1.5 percent. However lease rates for villas fell by 0.6 percent whereas sales dropped by a large 2.9 percent. The report added that in the first five months of 2015, apartment transaction volumes were down by 1.5 percent compared to the same period in 2014.