Rental property in Dubai continues to grow

The amount of property for sale in Dubai is now having a strong effect of rental yields. Unable to sell, many owners are putting their property on the market as a rental unit instead. This is having a marked effect on rents. RERA (The Real Estate Regulatory Authority) published its new guidelines, showing a 50% fall in rents in certain areas of Dubai and Landmark’s report this month shows a further 30% fall in Palm Jumeirah and recommends even cheaper rents than RERA’s.  This is good news for prospective tenants, and suggests we still have some way to go before Dubai’s property crash bottoms out.

“Since our last price map published at the end of March, we’ve seen a shift towards leasing. Owners are unable to sell their units and they are unwilling to lower their prices. They are adjusting their investment horizons and turning to leasing to generate revenue,” said Jesse Downs, director of research at Landmark Advisory, the consultancy division of Landmark Properties.

Palm Jumeirah Villa Rents in Freefall

Real estate broker Landmark in March published a rental index to better reflect the cooling market, after RERA’s first guidelines in January were criticised because it measured prices at the top of the market last summer.

In a report last month, investment bank UBS said house prices and rents in Dubai could fall by 70 percent from peak to trough amid the property collapse.

Landmark said its new lower rental limit for a four bedroom villa on the Palm Jumeirah is now AED270,000, with a two bedroom apartment at JBR and the Marina costing AED120,000 and AED85,000.

Rents for three bedroom townhouses in the Springs have declined 50 percent since the final quarter of 2008, Landmark said, and are priced at AED130,000 a year.

“Of course, the market is driven by the end-users and the average end-user is now motivated largely by value maximization – in other words, getting the best price for a high-quality home in a completed community,” Downs added.