Residential rents in Dubai rose 3 per cent in the first quarter 2015 compared to a decline of 1 per cent reported in the fourth quarter 014, according to report by a chartered surveyor and property consultancy firm.
“Even though the pace of apartment rental increases lost much of its vigour by the end of 2014, quarter-on-quarter (qoq) rent growth in Q1 2015 outdid Q4 2014. Average qoq rentals increased to 3 per cent in Q1 compared to qoq fall of 1 per cent in Q4 2014,” Land Sterling said in the new report.
The pace of rental decline in Palm Jumeirah continued, but narrowed down to 2 per cent in Q1 compared to an average 8 per cent in Q4 2014. The report said International City, Dubai Silicon Oasis and Jumeirah Village Circle (JVC) performed the best in terms of yearly rental growth at 11 per cent, 10 per cent and 8 per cent, respectively.
The consultancy predicted that even though rent hikes in the first quarter go against the current market softening sentiment, it is the “mid-two quarters that are rental demand dampeners and may see a wider rental declines.”
“Rental correction will eventually set in with a number of project handovers scheduled throughout the year especially in communities such as Dubai Sports City, JVC and Business Bay,” the report said.
Villa rental market, which lost its steam in Q2 2014, saw rent stagnation continuing in the first quarter, the fourth successive quarter.
First quarter decline and the previous quarters of 2014 was limited up to 5 per cent.
Four- and five-bedroom villa performed better compared to two- and three-bedroom villas on rental side, the report added.
Though cash buyers continue to dominate the transaction volumes, the company said it has observed an upsurge in mortgage buyers based on the enquiries received since January 2015.
“This is in line with the current wave of affordable project launches that appeal to long term buyers who rely on mortgages to ful?ll their ?nancing needs,” it added.
JLL, a real estate consultancy, said Dubai residents could expect rental declines this year, with even rent-free periods being offered to tenants followed by Knight Frank, a UK-based consultancy, projecting residential rents to fall by five per cent and property prices to go down by 5 to 10 per cent in 2015.
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