Tenants in Dubai will have an advantage while negotiating rental rates this year.
Asteco’s Q4 2016 report highlights that a significant amount of stock is coming to the market in 2017.
There are 31,500 apartments and 12,500 villas and townhouses scheduled to be delivered this year in areas including City Walk by Meraas, Damac’s Akoya, Dubai Wharf by Dubai Properties and Emaar’s Mira.
This is in addition to 8,750 apartments and 5,000 villas completed in 2016.
John Stevens, Managing Director, Asteco, said: “ The additional supply will continue to put downward pressure on market rates, which will place the negotiating power firmly in the hands of tenants, despite a forecasted increase in population.”
Figures in the Asteco Dubai Real Estate Q4 2016 report support the fact that the balance has been tipped away from landlords and it is the tenants who have the advantage when it comes to negotiating lease terms.
The average apartment rental rates declined by 5% since the previous quarter and 6% over the year, the individual numbers indicate that the market is becoming increasingly fragmented.
The majority of areas have seen rental rates for one bedroom apartments drop AED5,000 – 15,000. Units in Jumeirah Beach Residence are now available for AED105,000, Business Bay demands AED75,000 and International City reports AED45,000 on average.
As average one bedroom rents in Jumeirah Lakes Towers witnessed declines of AED15,000 over the year to AED75,000, rates in Downtown Dubai (AED115,000), The Greens (AED95,000) and Al Barsha (AED75,000) all held their rental levels year-on-year.
Average villa rents fell by 3% over Q4 and 5% year-on-year. Similar to the apartment leasing market, rents in areas such as Al Barsha and The Meadows saw double digit declines over the year as tenants relocated to newer, more affordable areas.
However, average rents for three bedroom villas in popular communities such as Jumeirah (AED190,000), Jumeirah Village (AED160,000) and The Springs (AED180,000) remained unchanged from a year earlier.
Two villa developments have crossed the AED200,000 mark for three bedroom units including Al Barsha and Arabian Ranches with villas available for AED 175,000 and 195,000 on average.