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Rental prices continued to drop in the final quarter of 2018, according to a report from real estate services firm, Chestertons.
While villa rentals fell 8 per cent compared to Q4 in 2017, apartment rentals were down by 12 per cent versus the same period the year prior, reports Gulf Business.
The report also stated that quarter-on-quarter, apartment rents fell by 4 per cent while villas fell by 3 per cent.
So where did rents fall the most in Q4?
The biggest average rental decline was seen in Al Furjan, where rents fell by 7 per cent from Q3. A three-bedroom unit in the community is now available for Dhs138,000.
Apartments in Dubai Marina, Dubai Silicon Oasis, Dubai Sports City, Dubailand and International City, witnessed a 5 per cent decline versus the previous quarter, with a one-bedroom in Dubai Marina now available for Dhs82,500.
Downtown Dubai, JLT, JVC, Dubai Motor City, Arabian Ranches and JVT all declined by 4 per cent from the previous quarter. A one-bedroom in Downtown Dubai is now available for Dhs95,000.
Established communities such as DIFC, Business Bay and Discovery Gardens witnessed a smaller decline of just 1 per cent from Q3. Palm Jumeirah, Jumeirah Islands, The Lakes and The Springs also saw declines of just 1 per cent.
What about year-on-year?
Year-on-year, the biggest average rental adjustments were seen at Palm Jumeirah and Al Furjan – both with a 13 per cent drop from 2017.
The most resilient locations in 2018 were JVT, Jumeirah Golf Estates and The Lakes witnessing 4 per cent declines from the previous year.
“Due to additional stock being available and limited new demand, landlords have had to compete, not only on rental rates but have had to introduce incentives to attract and retain tenants,” said Chestertons.
Many residents have felt the impact of these incentives, which include multiple
These incentives include multiple rent cheques – including monthly payments, rent-free period, the waiver of security deposits, multiple cheques to cover utility bills and short-term leases. In some cases landlords also cover the cost of agency fees.
“From a rental perspective, Dubai continues to be a tenant-friendly market, with many making significant savings by renegotiating terms and price with current landlords or moving to a cheaper location within their current district or relocating to a new community,” said Ivana Gazivoda Vucinic, head of Consulting at Chestertons MENA.
And rental prices in 2019?
Chestertons forecasts that the tenant will continue to have bargaining power into 2019.
“We expect rents to continue softening into 2019 as a consequence of additional supply being added to the market where tenants are now seeing better value for money and greater levels of availability across the board,” the report concluded.