There is now some good news for tenants in Dubai after over two years of skyrocketing rents.
According to CBRE Group Inc., the pace of growth in rent is finally slowing down in some of the city’s most sought-after neighbourhoods, even if prices are still rising at startling rates. After an inflow of immigrants to the financial and economic heart of the Middle East, rents have risen to record levels.
As to the real estate adviser, the average rental rate increased by 20.6% for the year that ended in September. This gain was somewhat less than the 21.7% recorded a month prior. The average leases for villas and apartments increased by 20.1% and 20.7%, respectively, throughout this time.
Villa rental rates hit a record high of 322,750 dirhams ($87,870) a year in September. While supply is limited, so prices will probably grow even higher, but not as quickly as they have, predicts Taimur Khan, head of research at CBRE. According to him, the main causes of that include renters avoiding price hikes by relocating to the outskirts of the city or suing to overturn eviction notices.
“The rate of rental growth has decreased every month so far this year, even though demand is still high,” Khan stated. “Several residential communities have seen a decrease in rental rates due to landlords who were ahead of the market being compelled to lower their asking prices,”
In places like the artificial island of Palm Jumeirah and the residential complexes around the tallest structure in the world, Downtown, rents are beginning to decline. As per CBRE, asking rental prices are declining in well-known districts like Business Bay and Dubai Marina. According to the report, last month’s average flat rental was 108,606 dirhams, the same as it was in 2017.
Simultaneously, September saw an 8.3% decrease in property transactions compared to the same month last year, mostly because of a 42% decline in off-plan purchases as new developments sold out and developers ran out of stock. Existing-home sales increased by 30.5%.
The supply and demand for mortgages are undoubtedly softening, according to Samy Chaar, chief economist of Banque Lombard Odier & Cie SA. While rents and prices are close to record highs, the increase in interest rates is slowing down a little when it comes to transactions and bank loans.