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Dubai rents increase?

Discussion in 'Dubai property' started by renter1, Dec 14, 2008.

  1. renter1

    renter1 New Member

    Article today in Business24-7 saying that Abu Dhabi rents have risen by 120-150% year to date.

    Does anyone have comparable figures for Dubai over the last 12 months? Are there any research reports on this?
     
  2. sasherwani2

    sasherwani2 New Member

    hehe.. looks like they knew what they had coming...

    Dont worry, rents will be going down 30-40% in 2009/2010... Massive layoffs coming up in the next 6-8 months..I hope noone here loses their jobs though.. that wud be painful..
     
  3. Djjunior

    Djjunior New Member

    Average rentals should be around 3k-4.5k dhs a month for a 1 or 2 bed apartment max for companies and individuals to actually afford it.. you will see this happen in the next 2 years imo.
     
  4. sasherwani2

    sasherwani2 New Member

    Yeah thats in line with what I assume the new rents should be. UAE is a country of expats and with the amount of layoff coming up, rents should come in line with (or decline below) the market rates in the US. USD 700-1000/ month for a one bed and USD 1000-1300 for a 2 bed. Discovery Gardens is now selling at AED 725k for a one bedroom which means the annual rental "ideally" should be AED 70k for a one bedroom in DG. Ofcourse its much higher than its worth but still lower than the AED 115k they are advertising nowadays.
     
  5. zombie

    zombie New Member

    Rentals are on the way down, 1 of my tenants has just vacated his flat & on talking to a few R/E agents the outlook is not good, so am hoping to put it up for another year b4 prices stablise to those levels. I think it will be some time b4 price of anything goes up. I heard on radio that commodity prices of foodstuff are set to fall 25% next year. Sign of things to come.
     
  6. financier888

    financier888 New Member

    rent prices dropping

    Anyone holding a unit for investment should be realistic and adjust their rental prices to reflect the current market conditions. Most of the prices listed in the paper are not reflecting the true transactions. You should also consider a discount for one check but be prepared to be flexable - by consideirng 2-3 checks for the right tenant. Thousands of people in the middle to hi income range are being retrenched and will not be able to find new jobs and leave. In addition, many, many investors have been holding vacant units with the intention to sell this year and we all know - this is not going to happen unless it's a steep discount. Even then, the new purchasor will probably rent it out. This is compounded by another 50,000 - 70,000 units that will be turned over in 2009.

    After January we'll see another wave of lay-offs and less demand. It's simple math - supply and demand. Prices MUST drop - which is better for Dubai in long run if they wish to reach their population targets as well as make this city more affordable for the middle class that needs to support local business.

    I would urge you to be realistic, and not 'hold-on' to rental prices that 'were' achievable but no longer attainable. Each month your unit sits vacant - that income (8%) is lost FOREVER. Discount your price for a quick deal and bank you check. The longer you wait - time will work against you
     
  7. georgihh

    georgihh New Member

    If the rents are going down the property prices will follow.
    The government will not let the supply to take over the demand.
    A drop of 10% is expected but anything more will be disaster and will not happen
     
  8. Wannaberich

    Wannaberich New Member

    Property prices are going down yet rents are increasing.With the slowdown in construction
    there will be even less completed properties to rent and so maybe this will push rents higher.
    It depends on how many people leave dubai after losing their jobs against the number of people coming to dubai.
     
  9. Roshan

    Roshan New Member

    With banks tightening up, a lot of developers will delay and even more would default. Rentals should stay where they are or a small correction provided the in flow of people are there.

    Most of the projects will not be completed and will be a mess. Only the good will surive from what one can see.

    Regards

    Roshan
     
  10. georgihh

    georgihh New Member


    Rents are not increasing they started going down
    Nobody wants new and better place anymore.
    Even 20000 units can damage the market a lot.
    Dubai is not that big - inside the bubble you can find lots of small bubbles.
    I hope the demolishing of the old areas will carry on next year as this is the only chance to safe the market.
    10% drop next year should be considered as a win
     
  11. financier888

    financier888 New Member

    govt controls

    For buildings that are months within completion, i assure you - the govt will not try to 'slow them down'. Look at it from the developers point of view - especially the larger govt linked companies. As fas the developer is concerned, the units are sold. It is in their interest to complete them ASAP - especially if there's a bank invloved because the interest on the mortgage starts to get paid by the buyer at hand over. In addition, the devleoper will want to complete and bank the final installments and book their profits. There is also the contractor that can only get paid on completion. The cost overruns of delaying the project 'willfully' eats into their margins.

    The projected 70,000 units may not hit the market in 2009 but most likely - a number very close to that. If you look at Old Town and the Burj Residences, most of the units that are rented are owned by long term investors - with a small percentage residing in them as end users. There are also large number of flats that are vacant that need to be resold or most likely will be rented because of the slow market. These rents and prices are already dropping - with rents dipping more than 10% and its' only been weeks....! and there are still tons sitting vacant. They will have to drop further to move and some investors are already starting to recognize this and acting accordingly.

    There are many, many sellers in the market now that hold anywhere from 2-3 flats to as much as several floors. More than you can imagine and certainly more than I expected. I know, because I am being offered to buy them out in mass. In my calculations, I am adjusting projected rent incomes by 30% less than current market by 3Q 2009. Thousands of people are leaving and more will be making an exodus. and I am not talking about people living in labour camps. Hotel occupancy on the upper tiers are already off by 50% + and this is the peak season. That will mean less service apartment rentals. Most international businesses are in no position to expand as we read daily about huge layoffs... So, who will fill them? Where will they come from? to keep the demand up?

    It's not all doom and gloom - I see the aforementioned as a good positive thing. yes, albeit, the returns are lower but US treasuries are under 3% and I am looking at the long term hold. Only with rents adjusting DOWN - commercial and residential - will Dubai be able to attract people back when the recovery begins. ( the other variable that can increase the demand is related to regional political risk.. but that's bit more complex and protracted within the context of this blog)

    It is true that many projects will be scrapped or delayed but these are the projects whereupon they have not broke ground or have started construction. In essence, they are paper and sand. Also - you will see more developers offering RENT / Purchase schemes - antoher reason why they will want to complete ASAP. The numbers just dont make sense to unduly delay construction in progress especially as construction materials like steel and cement have dropped 50%.

    There will be more funding coming into the market - different players - positioned for the long haul and of course, they will be buying to rent. These corrections are already being calculated for future acquisitions. But, I do respect everyones opinion and time will tell soon enough.

    My thanks for your feedback as as well as all of the members that have contributed.

    respectfully...
     
  12. Wannaberich

    Wannaberich New Member

    So why is it I am rented out a 1 bed for 75.000 in June and now other units in the same building are going for 95/100?
    Why is it that 3 bed Arabian Ranches villas were 250-280 4 months ago but are now 260-320?
     
  13. Djjunior

    Djjunior New Member

    Dobuy out of curiousity, are these actual transactions which you know about or listed prices by brokers??

    I found brokers are still trying to hold prices up in some cases.

    things are changing fast with things taking a turn globally within the last 3-4 weeks, in areas where people did not think was going to be affected (in this case rents in Dubai, in my case at the moment the property market in Africa).. etc..

    I dont know.. but i personally feel rents will have to allign themselves to a global standard as this is a global recession...

    Average rents should be roughly $800-$1500 max... for a 2 bed in my opinion.
     
    Last edited: Dec 17, 2008
  14. sasherwani2

    sasherwani2 New Member

    10% ?? be realistic man! Forget percentages for a moment and take a close realistic and sensible look at Dubai rents will ya? Discovery Gardens 1 bedroom apartment for AED 110,000 Dirhams! Thats USD 2,500 per MONTH! You can rent a villa with a swimming pool in the US with that price. Discovery Gardens isn't even high end.. its for "middle income" households. Rents are BOUND to go down atleast 30-40% in the next year or so. Dubai rental market was not a bubble; it was more like a "hot air balloon"! With the amount of layoffs coming up in the next 6 months, UAE will lose a BIG chunk of its expatriate population decreasing the demand for apartments signifantly pushing the rents down. Till now, rents have not begun the downward slide because the brokers refuse to advertise at a lower price. It eats up their commission. Many property owners too refuse to rent their apartments at lower rentals out of greed. But the cash crunch will force them to think otherwise soon...
     
  15. georgihh

    georgihh New Member

    When I went to Dubai in 2001, 30-40% of the flats where empty but the landlords didn’t drop the prices. The place I have taken was empty for more than 3 months and they gave me 5% discount plus I signed 6 months contract and the commission was like 3%.
    2009 will be a similar scenario they will give you nice contract less commission but very less discount
    Discovery garden is still not handed over completely and this is for a reason. Once the delivered flats are occupied they will release more.
    Prices will go down but not much, for the last 30 years they never went down even during crisis and recessions.
     
  16. Wannaberich

    Wannaberich New Member

    Another reason why rents won't go down for now is because far less people can buy as they can't get a mortgage.This means demand for completed rentable property is high and will keep pushing prices up.

    Djjunior,I know for a fact the rents I mentioned are being achieved.
     
  17. sasherwani2

    sasherwani2 New Member

    WRONG! Rents did go down during the late 90s...by 15-20%. I was HERE and even our lease was renewed at a lower rent back then. So I guess you just shoot stuff without any research at all. By the way keep watching this space and next yr same time you will be either thanking or cursing at me :) Rents will go down by atleast 40% same time next yr. Even though I believe in my own prediction more than newspapers still I would like to share a recent article with you....

    After rising steadily for six years, residential rents in Dubai are showing signs of weakening as more properties come on the market and demand eases with the slowing economic growth. However, in Abu Dhabi brokers say rents are still increasing.

    Dubai rates could see a correction of up to 30 per cent by the end of the first quarter next year for high-end properties in frontier developments, according to several agents.

    Rents have already fallen in the high-end apartment and villa segment, with demand being hit by businesses tightening staff accommodation packages. However, demand for rented accommodation in the middle-income segment remains strong. “The correction has already started and we can see that in new leases in Jumeirah Beach Residences, Dubai Marina, Palm Jumeirah and Jumeirah Lake Towers,” said Nayir Hussein, the general manager at Zenath Real Estate.

    “We are expecting a 25 per cent to 30 per cent correction in rentals, especially in the high-end market segment,” he said, adding that the supply of new homes offered for rent because of a scarcity of buyers would increase pressure on the segment. The softening in Dubai’s rental market follows a drop in property sales prices in the past three months, particularly in luxury developments.

    The value of apartments and villas has fallen by as much as 40 per cent in areas such as Downtown Burj Dubai and Palm Jumeirah, triggered by the liquidity squeeze and the freezing up of the mortgage market.

    The most significant declines in rents have been in Downtown Burj Dubai, a development by Emaar Properties, and Palm Jumeirah, the first of Nakheel’s Palm trilogy.

    Until June this year, a waterfront villa on Palm Jumeirah could fetch between Dh340,000 (US$92,550) and Dh360,000 a year in rent, but would now collect Dh240,000, according to Ashfaq Rasul, the sales manager at Excelet, a UK-based property leasing and mortgage advisory firm. Landlords in Downtown Burj Dubai, who were asking between Dh180,000 and Dh200,000 a year to rent a one-bedroom apartment in September, are now willing to take the same amount for a two-bedroom apartment.

    Villas in Emaar’s Arabian Ranches development have also been hit, with the rate for new leases dropping by between Dh50,000 and Dh60,000.

    At Jumeirah Lake Towers, a three-bedroom apartment that was being rented for Dh250,000 in September is now going for Dh200,000, according to Mr Rasul.

    “It is good in a way that Dubai is becoming affordable once again. Prices were too high to begin with, and landlords are realising they can’t have runaway rates any more,” he said.

    Midsized apartments and villas in established residential areas such as Al Barsha and Umm Suqeim have been less affected by the decline, added Mr Rasul. “Some properties have dropped more than the others and I don’t think rents in established areas like Umm Suqeim or Al Barsha could fall as much as Downtown Burj Dubai due to their proximity to major business centres.”

    Rents in areas such as Karama – one of the oldest districts in Dubai – and Nakheel’s International City, which are both areas primarily considered as mid-income homes, are holding up and property agents do not see a major change in rental patterns in these areas.

    “Further job cuts and additional supply next year could change the rental patterns in the midsized rental market, but for the moment it is holding,” said Mr Rasul.

    In Abu Dhabi, demand still outstrips supply in the rental sector and rates had held steady or increased, brokers said.

    “Abu Dhabi is a very different animal. It has got a huge shortage of ready accommodation,” said Vincent Easton, the head of sales at Sherwoods. “Abu Dhabi rents are holding up very strongly and are still increasing.”

    Supply of rental accommodation has increased as property sales have declined sharply.

    “Owners are stuck between a rock and a hard place,” said Sujeeva De Silva, a property consultant with Better Homes. “They realise they can’t sell the properties for another year if they want to avoid significant losses, and yet they can’t afford to keep apartments empty for long as there are monthly instalments and service charges to be paid.”

    Mr De Silva added that there had been a 70 per cent drop in the number of properties sold by Better Homes alone in the past three months. He estimated that a large number of properties would come back to the rental market..
     
  18. sasherwani2

    sasherwani2 New Member

    You guys didnt agree with me (and some even used inappropriate language "DoBuy!") when I predicted the property slide. Now again you guys disagree on the rental market crash. I guess either you guys dont live in Dubai OR are in denial OR are property brokers and dont want the investors to panic. People are getting fired left right and center in Dubai. Even government organizations are firing people. It has been just 39 days since the crash began. We have seen NOTHING yet..For the rental market to stay stable, there HAS to be ENOUGH tenants...
    This is my prediction for the following areas as far as rentals are concerned...laugh at me now but compare this list to the rental market next year (November 2009)....

    Discovery Gardens 1 bedroom AED 50-55k
    International City 1 bedroom AED 35k-40k
    JLT 1 bedroom AED 50-55k
    Marina 1 bedroom AED 55k-60k
    Greens 1 bedroom AED 50K-55K
    JBR 1 bedroom AED 60K-65K
    Palm Jumeirah AED 60k-65k
    Oldtown AED 60K-65K
    Sharjah 1 bedroom AED 25K-35K

    Other predictions:

    Salik prices will fall from AED 4 to maybe 2.

    Dubai Metro will not start operating in 2009

    Burj Dubai will not be complete in 2009

    Waterfront will be skimmed down to 1/20th of the original plan

    Palm Deira - cancelled

    City of Arabia - cancelled

    Dubailand - delayed bigtime and skimmed down bigger time

    Nakheel Tower - I'm still unsure about it but will be able to make a prediction in the next 1 month.

    Ajman - 90% of the announced projects will never see a floor above ground.

    Atlantis and Burj Dubai wont see occupancy levels more than 50%
     
    Last edited: Dec 20, 2008
  19. paul1970

    paul1970 New Member

    If the rental crashes to 30-40%, Will the salaries be reduced to 10-15%.

    or

    will the salaries remain the same and will the rental crashes to 30-40% ?.

    I think 10-15% discount on rentals are reasonable.
     
  20. Sportsman

    Sportsman New Member

    Sash, you sadly spew all these negative preditions and say you told people to get out, predicting a correction....did you not get burned from some fly by night operation in Ajman? Did you take your own advice??

    You're rental predictions are meaningless, you might be right, but very likely you'll be wrong....the rental market will soften, but there are far better opportunities in the UAE then most other first world countries currently. Rents are strong with people still moving to Dubai and Abu Dhabi, they will likely drop to a more reasonable level, but not likely to crash and you've predicted....you are obvioulsy angered by losing money and we all are concerned about the state of the market, but constantly spreading doom and gloom helps knowone.
     
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