Rents in Dubai continued to witness single-digit declines in the third quarter of 2017, according to real estate consultancy JLL. This was on the back of more supply – approximately 3,300 homes were delivered in Q3 – which resulted in more vacancies as tenants scouted for better deals.
“Numerous residential buildings, even within prime areas such as Downtown and Duba Marina, are seeing increased vacancies, and as such, tenants have been able to renegotiate their rents downwards by an average of five to seven per cent,” said Craig Plumb, head of research – Mena at JLL.
The majority of completions during Q3 were apartments. Villas and townhouses contributed 660 and 75 units respectively. The largest completions were Duja Tower in Trade Centre First, adding 679 units and The Polo Residence in Meydan with 598 units. District 1 and Lila in Arabian Ranches 2 contributed 267 and 219 units respectively.
Sale prices for both villas and apartments remained largely stable over Q3, according to JLL. The total value of transactions of existing residential properties (excluding land) has gone up, with sales in the year to August exceeding Dh13.7 billion, up by 28 per cent from the Dh10.7 billion recorded in the corresponding period in 2016.
August alone recorded residential unit sales worth Dh2.7 billion, with Marina and Downtown contributing the biggest chunk of value.
Forecasting 80,000 homes to be handed over by the end of 2019, JLL warns that this could result in a potential over-supply situation. However, actual deliveries are likely to be below this level. “While more of these projects are being marketed as ‘middle-income’, the majority remain above the price range that JLL deems affordable [below Dh800,000 for a 2-bedroom unit],” added Plumb.