The impact of Dubai's real estate crash has been so strong on the rental rates within the emirate, that even an address at the iconic Burj Khalifa, is not immune from this.
About 825 of the tower’s 900 ultra-luxury apartments are still vacant, following its grand launch last year, said Better Homes, a real estate brokerage firm in Dubai.
At present, the cost of renting a studio with marble fixtures and wooden floors has dropped to $1,815 per month from $3,025, while a single bedroom is available to rent at $2,722 ($4,536 earlier), the brokerage firm said.
An owner of a double bedroom residence at Burj, who spoke to the media, said that he had purchased the property for about $1.5mn in 2005. The value had jumped to about $762 per sq.ft., during the peak period. But now, the values are just above his purchase price. However, he is confident that the price will pick up faster here than any properties in other localities, given, its iconic location.
Burj Khalifa, with its one-of-a-kind amenities, including the first-ever Armani Hotel, is the most high-profile example of the once booming real estate market in Dubai.
On the whole, the property prices in Dubai have dropped by an average of 50 percent. Few half-built projects located away from the main highway that runs through the city, may never be completed, as their values have dropped too much, according to analysts.
Meanwhile, the units that are to be completed are also a problem. The Dubai economy needs to still accommodate a series of housing units coming on stream, or soon to be opened, which will further bring down the prices.
In the month of September alone, there was an entry of 27,000 new residential units in the market, with another 9000 to be completed by end of the year, reports Jones Lang LaSalle.
For the year 2011, the Company predicts that about 30,000 new units will come on-stream. The surplus in commercial properties have compelled landlords to offer incentives such as free rent, and allowances, to finish out shell construction space.
Dubai's RERA recently agreed that it is in the process of canceling half of all the projects registered with the authority. Out of 980 developments, 495 are on the chopping block, said the Dubai sovereign-bond prospectus.
However, the good thing is that people are no longer willing to purchase off-plan properties. Rather, the savvy investors or institutions are actually moving in, aiming distressed or re-priced assets, says Paul Devonshire, Director, Pramerica Real Estate Investors, specializing in the MENA region.