City’s Rental Index gets updated with lower rents for high-end locations
Dubai: Dubai’s official Rental Index has been updated for 2017, with emerging mid-market locations in Dubailand experiencing sharp increases. But Dubai’s budget-conscious tenants will still have cause for cheer as the rental band in established areas such as International City and Discovery Gardens have remained stable, according to market sources. But rents in the high-end communities will continue to be under pressure, with the Index indicating a 12 per cent decline in asking rents for properties on the Palm Jumeirah. A favoured location in the city among upscale professionals — the Greens — has softened by between 3- to 8 per cent, states the updated listing, which is overseen by Rera (Real Estate Regulatory Agency).
For tenants, the updated Index will give them some ammunition to bring to their negotiations with their landlords, at least in those areas that have seen marked changes from what they were in early 2016, when it was last updated. (The Index is updated annually.) “In the upper end of the market, rents have declined as was to be expected,” said Sameer Lakhani, Managing Director at Global Capital Partners. “This more than anything else perhaps mirrors the sluggish outlook for jobs in the upper management levels.”
“But affordable communities — both from a sale and rental perspective — are rising sharply in areas like Dubailand.” (For instance, the mid-rise Arjan community now has rents up by between 25-30 per cent from a year ago.) Dubai’s non-freehold areas too have not see much by way of change. (But in these locations, older or poorly managed properties are taking hits when it comes to lease renewals.) Now that it’s official, landlords with properties on rent in areas that have been marked as having softened will have little leeway to ask for more in their annual lease renewals. There are reports coming through of landlords being forced to cut down on their demands or see their properties remaining vacant for longer.
“My villa was on the market for more than five months when I was asking for Dh230,000,” said one landlord, who has a portfolio of upscale properties in the rental market. “Only when I dropped it to Dh200,000 was I able to get someone coming in and handing a single cheque. That was the deal sealer.”
Companies who lease on behalf of their senior management or for staff quarters too are demanding landlords scale down their rates. Negotiations are taking longer and where necessary the companies are even willing to relocate their staff to more affordable locations if that helps cut down expenses.
A snapshot of rental bands in Dubai’s popular locations
* A two-bedroom in Dubai Marina — Dh120,000-Dh160,000
* Palm Jumeirah — Dh150,000-Dh220,000
* The Greens — Dh110,000-Dh140,000
* Arjan — Dh65,000-Dh80,000
* Business Bay — Dh110,000 — Dh140,000
* International City — Dh45,000-Dh60,000
* Discovery Gardens — Dh70,000-Dh80,000
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