Samir Salya discusses rental values in Dubai

Depending on the specific area, it’s clear that many rents in Dubai have seen some kind of correction during the last year. This is linked with locations that have seen new properties and developments coming onto the market, and therefore putting pressure on landlords to lower their rents.

Over the first nine months of 2017, approximately 11,800 homes were handed over. Areas such as Dubai Sports City and Jumeirah Village Circle have seen significant numbers of new supply of properties.

Rents declining

The consultancy Cavendish Maxwell have shown that rents have declined by an average amount of 2.8% for apartments and 3.5% for townhouses and villas during the past 12 months.

The reasons for these declines, according to the consultancy, include new project handovers, particularly of lower priced stock. They also point towards job losses and salary adjustments in some sectors in Dubai.

To sweeten the deal, landlords are cutting rents, and in some cases throwing in a rent-free period of a few weeks.

Sales figures

For sales of property in Dubai in Q3, there were 8,900 transactions. July 2017 was the busiest month of this quarter, which could be due to the renewed activity post-Ramadan, which had seen subdued business.

Off-plan sales covered 77% of the transactions during this period, with top investor locations of Business Bay, Town Square, MBR City and Dubai South.

This momentum in sales of Dubai property is driven mostly by a higher number of end-users than previously. In particular that has been a surge of first time buyers looking to enter a market that is offering lower prices and attractive payment plans.

Some local banks have also introduced new mortgage products, which have also

“The introduction of new mortgage products by some local banks has also encouraged more activity.

More pressure on rents

A survey of brokers shows that townhouse and villa rents will continue to feel more pressure in the future. It looks possible that new buyer enquiries could increase in the final quarter of 2017, with a spike expected in the number of agreed sales.

This will mean landlords will be forced to remain as competitive as possible with rent prices, in order to attract tenants.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing