Dubai Apartment Rents Edge Lower, Offices Stable

The cost of housing remained largely stable but rents in some residential areas continued to fall in July, according to KT-Asteco Rental Monitor. The average rents for one-, two- and three-bedroom apartments in mid-tier residential neighbourhoods of Bur Dubai, Al Barsha and Greens fell by about seven per cent in the June-July period while studio apartments in the localities saw no month-on-month changes. The studio apartments in this category stood in the range of Dh40,000-60,000 at the end of July. The rents of studios and one-bedroom apartments in the International City and Discovery Gardens fell on average by six per cent in the same period. The average leasing rate of a studio apartment in International City came down by Dh2,000 to Dh28,000 in July. The apartment rents in top-tier locations such as Palm Jumeirah, World Trade Centre Residences, and Downtown Burj Dubai remained unchanged.

The average rents of studios in this category stood in the range of Dh55,000-60,000 in July, while one-bedroom apartments were leasing in the range of Dh90,000-130,000. Two-bedroom and three bedroom apartment rents stood at Dh120,000-170,000 and Dh170,000-220,000 respectively. With demand lying low, the survey found that many landlords, keen to hold on to the current rental yields, are resorting to discounts such as free stays and extended payment terms. Some are willing to substantially reduce the quoted rents, if the tenant agrees for a lump sum payment of the annual rent. While payment of rents in 12 monthly cheques is slowly becoming the norm, some are offering a month or two of free stay if the annual rent is paid in 6 cheques or less. “It is almost like taking few thousand dirhams off the rent,” said Jason Moore, managing director of Mayfair International Real Estate.

His firm has listed many properties on classifieds website Dubizzle which are available either on 12 monthly installments or a tenant can stay one extra month for free if he chooses to pay the rental amount in 6 installments. However, according to Moore, most of his clients prefer to go for monthly payments rather than a month’s free stay. “Many still go for 12 cheques as they want to keep the flexibility of monthly payments.” The extended terms and flexible payment options might be a sign of continued weakness in the sector but Moore says it is not the time to second-guess the market. “I don’t think anybody can predict where the rentals are headed in the short-term,” he said. “Some people are leaving but everyone knows about that. A lot of supply is coming to market, but everyone knows about that. So the current rents might already be reflecting the future market expectations.