Dubai rents to drop with increased supply in 2017
Around 20,000 new homes are expected to be delivered in Dubai in 2017 as increased supply in the property market may push down prices in key areas
Around 20,000 new homes are expected to be delivered in Dubai in 2017 as increased supply in the property market may push down prices in key areas, experts say.
The majority of new homes will be located in more affordable locations such as Sports City, Dubailand and Silicon Oasis, areas that make up as much as 50% of the forecasted supply, Gulf News reported.
The shift to more affordable housing options is evident, as high-end properties are expected to make up only about 19% of the total residential stock in the coming year, as compared to 30% in the past.
In fact, only a couple of years ago, the high-end market used to make up more than 80% of the pipeline.
David Godchaux, CEO of Core Savills said: “Off-plan apartment projects in Jumeirah Village and Sports City, especially those nearing completion, are enticing end-user occupiers as both these areas offer projects with better facilities and larger layouts.”
Areas closer to the inner city have seen a dip in prices in the past year, with Business Bay and Dubai Marina seeing declines of 3 and 2%, according a report.
The Greens and Discovery Gardens have also seen dips of 2.5%, while Jumeirah Lake Towers and Jumeirah Village were the only areas that saw a marginal rise of 1%.
Though more tenants are moving to more affordable areas in outer areas of the city, the shift remains gradual.
“The trend of tenants moving out to outer areas, trading connectivity for larger units, exists — however, it is still slow as the cost offset doesn’t match up to the inconvenience and charges incurred,” explained Godchaux.
A recent report by international real estate consultancy Cluttons noted that the rate of decline is expected to slow heading into 2017 before reaching a new base towards the end of next year.
Faisal Durrani, head of research at Cluttons said: “We still expect residential values and rents to end the year 10% down on this time last year, with any bottoming out unlikely to materialise till next autumn at the earliest.”