Dubai rental price 'uplift' fuelled by landlords

Written by Administrator

Thursday, 20 August 2009 22:48

In a report titled 'Delaying the inevitable: Owner behaviour preventing rent floor' Landmark Advisory has pointed to the recent rental price increases in some developments being fuelled in part by landlords refusing to accept market forces. During Q2 of this year, the average price for apartment rents fell by 23% to Dhs129,900, while average leases for villas fell 19% to Dhs220,350.

This brings villa leases down 31% from their peak in Q3 2008, and apartment rents down 29% from their peak in Q4 2008.

'[We are] observing an unexpected, albeit marginal, upsurge in rents across Dubai,' says the report.

'Landlords are delisting or foregoing listing their properties, either due to dissatisfaction with current rent levels, or because they are on vacation during the summer. Either way the result is a marginal average increase in rents at a time when the fundamentals should be dictating the opposite trend.'

The report is scathing about what it sees as an abortive attempt to stop rental rates reaching a realistic floor.

'Assuming that landlords are exiting the market due to lower rents, this behaviour will prevent Dubai's leasing market from reaching a rent floor. The momentary respite in the rent correction process, caused by supply distortion, is only temporary and will reverse as soon as those properties come back onto the market. Real rents will be determined by what Dubai residents are willing to pay.'