Rentals slowing down, but yields remain high: Reports
The cheapest area to rent one-bedroom apartment in Dubai is Al Awir, according to data released by EZHeights, a property consultancy.
Rentals in the above area range from Dh30,000 to Dh40,000 per annum (pa), or Dh2,500 to Dh3,333 per month.
International City comes in next at Dh38,000 to Dh45,000 pa followed by Dubai Investment Park, Abu Hail and Al Ras with rates falling in the range of between Dh40,000 and Dh50,000 pa.
Renting a one-bed unit in Gardens will cost Dh47,000 to Dh60,000 pa, while International Media Production Zone is a bit costlier at Dh50,000 to Dh55,000 pa.
Chestertons MENA said, in a report released earlier, that property prices and rents in the emirate remained stable during the second quarter of 2016.
Average gross yield across the apartment segment was at 7.5 per cent, but primarily landlords with properties in affordable districts registered higher yields of 10.2 per cent in Discovery Gardens, 9.4 per cent in International City and 7.9 per cent in Dubai Silicon Oasis.
“The market will remain slow during the third quarter and rental demand will continue to be weak,” the consultancy added.
JLL, a property consultancy, has already reported that 1,680 units (apartments and villas) were added during the second quarter 2016, taking the total stock to 462,000 units.
“The residential segment of the market is positioned close to the bottom of the property cycle, suggesting that rents are close to the trough,” it said.
In order to control arbitrary rental hikes, the Dubai government has already issued Decree No. 43 of 2013 concerning the percentages of maximum property rent increase that are to be allowed upon renewal of tenancy contracts. The rent increase slabs are as follows:
* No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property in the same residential area.
* If the rent value is between 11 and 20 per cent less than the average rent of a similar property, the maximum rent increase shall be equal to 5 per cent of the rent value.
* If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the maximum rent increase shall be equal to 10 per cent of the rental value.
* If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property, the maximum rent increase shall be equal to 15 per cent of the rental value.
* If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the maximum rent increase applicable is 20 per cent.
The decree also informs that the average similar rental value of the property will be determined by the rent index.
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