Apartment and villa rents expected to remain steady in prime and midmarket locations
Apartment and villa rents in Dubai are expected to remain steady in 2012 but some experts believe they could dip as new supply comes onto the market.
The emirate’s rental real estate market held steady for a fourth consecutive quarter according to the latest report from property consultancy Asteco. It said it the market is showing signs of recovery.
Rental rates for apartments in prime and midmarket locations stabilised in the fourth quarter, with Nakheel’s International City the only project to see a small slide in lease rates.
‘Transactions levels are rising as job security and increased market confidence results in people seeking tenancy upgrades and home ownership,’ said Elaine Jones, chief executive officer of Asteco.
The company has seen an increased number of new people relocating to the emirate as a result of the general life in business performance, Jones said.
The consultancy also saw increased interest from buyers in other Arab countries seeking safe haven investments amid the region’s political upheaval.
The average rental cost for one and two bedroom apartments in Dubai Marina were AED62,500 and AED80,000 in the fourth quarter, unchanged from the previous three month period.
On Dubai’s Palm Jumeirah, a year’s lease for a one bedroom apartment was unchanged from the previous quarter at AED90,000, said Asteco.
But in Nakheel’s International City, annual rents fell to AED23,000 for a one bedroom apartment, a decline of 2%.
In Discovery Gardens, which saw a 10% fall in the third quarter as Nakheel released new units to the market at rents that undercut owners, leases held steady at AED38,000 a year.
The value of real estate sales in Dubai in the first ten months of 2011 were down 85% compared to the same period in 2008, the latest Land Department data shows.
The city saw less than 1,700 real estate deals in the first ten months of the year, a 70% decline on sales made at the housing market’s peak in 2008.
However, the release of some 10,700 new apartments and 1,300 villas to the market in 2012 could spur a minor fall in sales prices for apartments and villas, Asteco said.
Properties in poorly maintained projects are likely to be worst hit as tenants upgrade to newer developments, the report said.
‘Apartment and villa rents are seen steady in 2012 with minor declines for low quality and poorly managed buildings in certain areas. Transactions are expected to remain high as further supply enters the market leading to more price competition for owners and more choice for tenants,’ the report added.
Lot of development projects are undergoing, the more supply in the market will reduce the demand and price too. It is a good news for those looking for affordable properties.