Dubai’s Record Rental Boom Gradually Beginning to Slow Down!
After over two years of skyrocketing rents, some of Dubai’s most sought-after neighborhoods are beginning to see rent growth slow down, according to a report from CBRE Group Inc., a real estate adviser. Rents soared to record levels last year as the Middle East financial and business hub attracted an influx of new residents. The average rental rate rose 20.6 percent in the year to September, slightly less than the rise of 21.7 percent a month earlier, CBRE said.
Over the same period, average leases for both apartments and villas increased 20.7 percent and 20.1 percent, respectively. In September, a villa averaged a record $87,870 per year, and while rental prices are expected to continue to rise due to a limited supply, they are not expected to increase as rapidly as they have been in the past, according to Taimur Khan, head of research at CBRE. This is largely due to tenants avoiding price increases by relocating to the outskirts of the city or contesting eviction notices in court.
Although demand is still high, the pace of rent growth has slowed down every month so far this year, said Khan. “A lot of listings in residential communities have seen a decrease in their rent as landlords who were ahead of the game are now being forced to lower their asking rents.” Rent is beginning to slow down in areas like Palm Jumeiry and residential towers around the world’s tallest tower in Dubai’s Downtown, as well as in popular areas such as Business Bay or Dubai Marina.
According to CBRE, the average apartment rental in Dubai reached 108,639 dirhams in September, the same as in 2017. Property transactions decreased by 8.3 percent in September compared to the same month last year, with 42% fewer off-plan deals, while sales of existing homes rose by 30.5 percent. “We see a softening in both demand and supply for mortgages, both in transactions and in bank loans,” said Chaar. “Rent and prices are close to record levels, but it’s slowing down somewhat.”
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