Rents are likely to fall by five to 10 per cent in the next six months in Abu Dhabi, Dubai and Sharjah, according to real estate experts in the UAE.
Redundancies and an oversupply of housing units are cited as the main reasons, according to Gulf News.
“Rents are dipping in Reem Island and Corniche owing to an oversupply of residential villas and apartments. Last year, a one-bedroom apartment in Gate Tower on Reem Island was leasing for AED90,000 annually. Now you can get it for AED80,000,” said Ben Crompton, managing partner, leasing, sales and property management, Crompton Partners Estate Agents.
Craig Plumb, head of research – MENA, JLL, said villa and apartment rents have dropped by 10 per cent in Abu Dhabi in the last 12 months and the trend is likely to continue.
Plumb said rents in Dubai have declined by three per cent for apartments and eight per cent for villas in the last year. “Rents are currently close to the bottom of their cycle,” he said.
Niraj Masand, director, Banke, said two-bedroom apartments in Bur Dubai are renting out for AED110,000. “Barely an year ago they were going for AED140,000. Similarly in Karama two-bedroom apartments that fetched between AED130,000 and AED140,000 in 2016 are now available for AED100,000.”
Masand reckons Dubai will see a significant rent drop owing to oversupply in the market. “Despite prevailing market conditions, many landlords are refusing to lower their rents. As a result, many units have fallen vacant. Eventually, they will have to relent.”
Masand said like in other emirates, rents have also fallen in Sharjah because of oversupply of properties. “The slide is likely to continue for another six months.”