Dubai tenants are in a good negotiating position as landlords increasingly become flexible given the downward trend of rents. Experts say real estate prices are expected to decline further this year as the market absorbs the amount of supply that came in last year, and what will be completed in 2019.
“More and more families are taking advantage of the current market situation to relocate from an apartment and upgrade to a villa with more space and a garden. It’s no longer a case of where one can find a suitable property, but deciding which to choose,” said Lukman Hajje, chief commercial officer of UAE real estate portal Property Finder.
Advertised rental asking prices for Dubai apartments have dropped almost 30 per cent in the past two years, more than half of that in 2018, according to Property Finder’s latest trends report. Villa rents have dropped around 22 per cent over the same period, with an 11 per cent drop in 2018.
This year, there will be an increase in affordable rents, particularly for town houses and small villas, even as capital values and rents soften at a slower rate, according to a 2019 outlook from real estate consultancy ValuStrat.
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The second half of 2018 saw the biggest declines in advertised rents in the Green Community (down 9.3 per cent), Jumeirah Lakes Towers (8.7 per cent), and DIFC (7.5 per cent), according to Property Finder. For villas, the biggest rent declines were in Damac Hills (down 19.3 per cent), Victory Heights (16.2 per cent) and Dubai Silicon Oasis (8.3 per cent).
Certain established communities with good amenities bucked the trend as The Lakes, Arabian Ranches and Arabian Ranches 2, they all witnessed small increases in their median advertised rents by 3.7 per cent, 2.2 per cent and 1.5 per cent, respectively.
International City is the cheapest place to rent an apartment in Dubai with a median advertised annual rent of Dh32,998. City Walk is the most expensive with a median of Dh189,674 per year, according to the Property Finder report.
The median asking price for an apartment for rent in Dubai is now Dh80,000 for a year. Elsewhere in the UAE, it is Dh71,000 in Abu Dhabi and Dh38,000 in Sharjah or Ras al Khaimah. In Ajman, it is only Dh26,000, down 27 per cent from two years ago.
Buyers are also in a better position. There was a substantial jump in residential sales transactions in Dubai in the last quarter of 2018, with off-plan sales volumes up 47.9 per cent and ready sales up 24.8 per cent from the previous quarter, the ValuStrat Dubai Real Estate Review report said.
“2019 is expected to continue this trend with affordable options for buyers,” said Haider Tuaima, head of real estate research for ValuStrat.
More than 47,500 apartments, villas and town houses are set to be completed this year, based on figures from Dubai Pulse, the open-data platform initiative from the Smart Dubai office, and compiled by Property Finder. That is 40 per cent more than last year’s total residential supply of 28,890 units.