Dubai - Decypha: Residential rental rates in Dubai have slumped by 1% quarter-on-quarter (QoQ) in the first quarter of 2017 (Q1-17) affected by a surge in the supply in the housing market.
The residential sales have also declined by 1% in that period, said the latest Dubai Market View published by commercial real estate adviser CBRE on 2 April.
The number of lease renewals at lowered rents in Dubai is three times more than mid-2012 levels, saying it reached the highest level since that period, Managing Director of CBRE Middle East Nicholas Maclean told Arabia Business.
In addition, the latest CBRE report said that landlords have become noticeably flexible with rental values allowing tenants to negotiate. Maclean attributed this to landlords’ desire to retain existing tenants not to lose them and risk having their properties empty.
The commercial sector, however, has maintained its strength, as office rental rates did not witness any change in the activity levels, with the average values in prime areas stablised at AED1,920 ($522) per square metre per annum.
Meanwhile, the rental levels in secondary areas have decreased by 1% QoQ, registering AED1,067 ($290) per square metre per annum, according to CBRE.
Rentals of onshore building, for non-free zone buildings in Sheikh Zayed Road and parts of Business Bay, have slowed down.
Maclean explained in the recent interview that international occupiers have active demands in the market as there was a “quiet migration” of companies from other Gulf countries to Dubai and Abu Dhabi, stemmed from their need to have their operations in the UAE, “which has ease of recruitment opportunities and quality of accommodation,” he said.
Also, revenues of the hospitality sector have declined by 5% year-on-year with visitor arrivals registering 14.9 million in 2016.
In the same line, prices of Burj Khalifa apartments fell by 25% over the past 12 months, according to a recent report from London’s property consultant Cluttons.
Meanwhile, prices of Hattan villas have also witnessed a major drip by 13.5% at the Lakes and 12.6% at the Arabian Ranches, according to the report. On the Palm Jumeirah, villas prices dropped by 12.3%, while apartments have fallen by 11%, recording the five weakest performances spotted by Cluttons.
Through looking collectively at Dubai, values of villas and apartments fell by 6.8% and 0.9% respectively in Q1 2017.
In 2016, the market in Dubai was reported to be the “weakest capital value” in five years, falling by 8.8%.
By Decypha Editorial Team
