Rent in Dubai is likely to fall this year
Residential rents in Dubai are expected to see further declines over the first half of 2019, before stabilising in the second half of the year or early 2020. This comes on the back of a huge level of supply expected to hit the market this year.
Analysts estimate that more than 63,000 homes will be delivered in Dubai this year. These are projects that were launched as Dubai won the bid to host Expo 2020.
“While many of these projects will not be delivered on schedule, the level of actual completions is still likely to exceed demand. Another negative influence on the rental market are the attractive payment plans being offered by many developers that are seeking to attract renters to purchase property in Dubai. This will result in a relative shift in the market with more demand to own and less to rent properties,” says Craig Plumb, head of research, JLL Mena.
According to PrathyushaGurrapu, head of research and advisory at Core: “In the rental market, the older central built stock continues to be under pressure to retain its novelty with occupier preferences shifting to outer areas where newer and competitively priced options are increasingly becoming available.”
JLL estimates that around 22,000 homes were completed in Dubai in 2018, the highest level for the last five years. There was a significant surge of handovers witnessed during Q4 2018. The vast majority (around 75 per cent) were apartments, with the remainder comprising townhouses and villas.
The consultancy ValuStrat estimates that upcoming supply for 2019 currently stands at 78,566 residential units.
“However, this number is subject to significant downward adjustment. Communities with significant upcoming supply in 2019 include Dubailand [Akoya Oxygen, Damac Hills, Town Square, Dubai Legends, Arjan], Mohammed Bin Rashid City [Meydan One, Dubai Hills Estate, District 11], Jumeirah Village Circle and Business Bay,” informs HaiderTuaima, head of real estate research at ValuStrat.
These are the communities that are likely to see significant rent reductions.