Tenants in Dubai are benefiting for a 4 to 8% reduction in rent as more residential property comes onto the market in the emirate, according to a new report.
And the owners of real estate, although not yet seeing a recovery in prices, can take heart from the fact that sales prices are level, according to a new report from Astecto Property Management.
The price of apartments, villas and commercial properties remained stable in second quarter of the year compared to the previous three months with minimal reductions in villas across just two areas of the city, according to the report.
The Asteco Q2 2010 Report said that no change was recorded in the sales price of apartments and offices, with flats in Dubai International Financial Centre (DIFC) and on Palm Jumeirah still commanding the highest prices.
‘The market is at a stage where pricing can vary from unit to unit in any particular property. We have noticed some overseas clients, who bought property on Palm Jumeirah, are prepared to sell at a much lower price per square foot as the exchange rate is more favourable without them incurring any discount,’ said Elaine Jones, chief executive officer of Asteco Property Management.
Villas are roughly the same as the first quarter of the year in all areas except The Meadows and The Springs, where prices declined 5 and 6% respectively mainly due to the large number of units available in the area, their age and the fact that owners who initially bought into this development at low launch prices, are in the position to reduce their asking price without making a loss, the report also pointed out.
Palm Jumeirah villas remain the most expensive at AED1,800 per square foot due to its iconic water front development, with the Green Community at the opposite end of the scale with villas selling for AED700 per square foot.
An increase in the number of units coming online over the second quarter of 2010 forced prices down, providing tenants with the opportunity to move to better locations or larger properties. Overall, apartment rents declined an average of 8% compared to the first quarter of 2010.
Dubai Marina proved particularly popular with people previously living in Jumeirah Lakes Towers (JLT), attracted by the wealth of amenities. This movement then had a knock on effect down the price chain as those in Discovery Gardens upgraded to JLT and people in International City looked for flats in Discovery Gardens.
‘Although relocation trends from Abu Dhabi and Northern Emirates have slowed due to price correction in those markets, internal movement in Dubai is at its peak with tenants looking for upgrades in terms of quality, size or location. But there is an exceptionally broad range of prices, depending on the motivation of the landlord. As a consequence the rental market, especially for apartments, is very active, explained Jones.
On the rental front villas fared better with rental reductions of just 4% on average across Dubai despite supply also increasing. Villas in Jumeirah proved the most resistant, seeing falls of just 1%.