Thursday, August 27, 2009

Dubai rents stable in few areas

The distortion in supply has led to temporary rent stabilization in few areas of Dubai, while rents in other parts of Dubai are continuing to rise owing to lack of supply, states a report by the leading real estate consultancy firm, Landmark Advisory in its report.

The increasing rents could be due to lack of supply. Several landlords have removed inventory from the market to avoid renting out at current market rates, while others could be out of town during summer and therefore consequently unavailable, said Charles Neil, CEO, Landmark Advisory.

The leasing supply may also be affected by the month of Ramadan, with several landlords waiting until end of the year to reassess the market, he pointed out.

The consultancy firm, in its August 2009 lease guide for the Dubai market, states that the demand for property was particularly strong during June and July with considerable amount of leasing contracts ending around this period. However, the marginal rent increase triggered due to this is considered unsustainable by Landmark Advisory.

Rents in several areas of Dubai have dropped significantly during the past 5 months, but, there are few exceptions to this trend as few units in some preferred developments seem to be doing well.

The price map indicates a continued upgrading trend with major factors for relocation being the demand for location, quality and size.

Landmark Advisory predicts that several residential areas in Dubai are due for further fluctuation, particularly, with the new supply coming into the market during the next 12 to 24 months.

If the rents do decline for these areas, then additional relocation demand can be expected, as long as landlords adapt pricing strategies. This relocation demand will further help in mitigating rental declines, Neil explained.

1 comment:

Ann Julie said...

Well overall Dubai property prices have fallen. Countries like France, Germany, Honk Kong, Japan and Singapore have come out of recession, so lets hope it will have a positive effect on the Middle East real estate market.