Dubai home rents and prices are set to continue falling both this year and next as more supply enters the market, making properties more affordable for both renters and buyers, a new report shows.
Nearly 29,500 units will be delivered in the emirate this year, with around 16,500 units already delivered so far and an additional 13,000 units expected over the remainder of 2019, Core Research said in a report on Dubai's property market on Sunday.
"We expect rental prices to remain under pressure in 2019/2020 and the rental market to continue being tenant-friendly," the firm said. "Sales prices are forecast to remain under pressure in the foreseeable future as the market gradually adjusts to supply and demand dynamics on the back of ongoing reforms."
The forecast comes amid government measures to stimulate demand for property, including issuing long-term visas and easing company ownership rules. At the same time, the government is also taking steps to mitigate supply through initiatives such as the new real estate committee, which aims to provide better supply balance in the Dubai market through greater collaboration between government-related entities and private sector firms.
Dubai's real estate market has slowed in the wake of a drop in oil prices that began in 2014 and ongoing concerns about a supply glut.
Across the emirate home rents continued to fall in the third quarter of 2019, according to Core Research.
The steepest drop in apartment rents were in Discovery Gardens with a 13 per cent decrease and in Dubailand with a 12 per cent decline as competition intensifies in the affordable homes market, the report said.
"Many tenants are looking to move by upgrading to bigger and newer developed projects for similar or lower rents," the firm said. "Tenants who aren’t relocating are negotiating during rent renewals and mostly achieving rent reductions, as tenant retention becomes increasingly challenging for landlords."
The biggest rental falls in villa communities were in Emirates Hills, Jumeirah Park and Dubailand, with year-on-year declines ranging from 13 per cent to 7 per cent, the report showed.
Residential sale prices also continued to drop across most neighbourhoods, with apartments in Dubailand (-19 per cent), Discovery Gardens (-15 per cent) and Dubai Sports City (-15 per cent) and villas in Jumeirah Village (-13 per cent) witnessing the sharpest drops.
However, apartments in Palm Jumeirah, Jumeirah Village and Business Bay saw an uptick in average sale prices as newly-developed projects in those areas are in the higher price range, which increases the area average, even though older stock in these areas continue to show a "subdued performance," Core Research said.