Average rents for apartments in Dubai fell by up to 26% and for villas by 34% in the last three months compared with the first three months of the year, according to the latest published figures.
Apartment and villa prices also declined but enquiries and transactions are increasing, says the second quarter report from property services firm Asteco.
Studios saw the steepest decline with rents falling 26% while one bedroom apartments were down 6.13%. Two bedroom apartment rents went down 18.94% and three bedroom apartments suffered a fall of 19.19%. Villa rents dropped 34%.
The report also identifies a new trend where tenants are moving from older buildings in less desirable locations into better quality units in places like Dubai Marina, Jumeirah Beach Residence and Discovery Gardens. â€˜This is particularly the case where single occupants and small families are concerned, as the moving costs are lower, and they are usually more flexible than larger families,â€™ the report says.
Also more owners are renting out their property rather than sell at a reduced price or moving in themselves. There is also an increase in tenants from Abu Dhabi renting in New Dubai and then commuting to work.
Established communities such as Jumeirah Beach Residences, Downtown Burj Dubai and Springs have seen the most enquiries from tenants and consequently, the rents in these neighbourhoods have been least affected by the decline. The cheapest place to stay is a one-bedroom flat in International City were rents fell by 21% in the last three months.
Sales prices of apartments are down 15% and villa prices have fallen by 13%, representing a significant slowdown in negative growth compared to the quarter-on-quarter decline from the fourth quarter of 2008 to the first quarter of 2009, the report also shows.
But enquiries and transactions have increased over the last three months, with buyers primarily seeking units in well-established and well-located developments with complete infrastructure and community facilities.
Investors are keen to take advantage of numerous opportunistic deals with cash buyers currently dominating the market. Asteco said there has been little movement in off-plan sales, irrespective of price levels as developers re-assess their commitments. As a result, prices in developments such as Downtown Burj Dubai, Dubai Marina and Emirates Living are showing early signs of stabilisation, the report points out.Â Â Â As property prices see stability and financing restrictions relax, Palm Jumeirah reported a 20% surge in sale prices for villas and 7% for apartments. However, rents on the development declined by 12% for apartments and 25% for apartments villas.