Apartment property rents in most parts of Dubai continued to decline in August, though in some residential areas rents stayed steady and even increased slightly, according to a new survey.
The variation and severity of adjustments in apartment rental rates depended largely on the size, location, accessibility and quality of the flats, with prime areas able to resist the downward trend in rents better than secondary or less desirable locations, the research from management firm Asteco and the Khaleej Times found.
‘Apartment rents have only stabilised in the most sought-after developments, which offer higher quality, better location and amenities like retail components and other leisure facilities,’ said Ahmad Saidali, head of investment in Dubai for property consultancy CB Richard Ellis (Middle East).
‘But one should also consider the holding capacity of some owners, who instead of accepting slightly lower market rents, will instead choose to leave properties vacant for an extended period of time in the hope of achieving their expectation of rental value. In some cases, this has created a short-term supply distortion, with some prime districts seeing availability of units virtually dry up,’ he added.
In most cases, however, landlords are finding it difficult to persuade their existing tenants to stay, even if some owners have reluctantly reduced their rents and agreed to accept more flexible, monthly payments. Last year, landlords typically accepted no more than four cheques as payment for an entire year’s rent.
Others have also resorted to squeezing out middlemen or real estate agents by advertising vacancies themselves. ‘Landlords are now ready to negotiate the lease downward at the prevailing market rates in order to keep their tenants. But most tenants are relocating now to upgrade their accommodation, which they could not afford to do a year back. The natural trend is towards better-located, higher-quality and established developments,’ Saidali explained.
New housing units expected to come on stream during the next two years are likely to pose more problems for landlords, especially if general demand continues to weaken.
‘New developments which are emerging now would see further downward pressure on the rental side. Only in the established developments like Downtown Burj Dubai and Dubai Marina will rents move up marginally,’ he added.