Rent prices have continued to fall across most of the areas in Dubai. The fall can largely be attributed to the additional property supply that continues to hit the market.
New areas such as Jumierah Village that offer a large number of apartments and villas are continuing to add to the number of properties available for rent. Other new areas contributing significant supply are Sports City, Dubailand district, Business Bay and new buildings in Downtown Dubai and the Dubai Marina amongst others.
This is continuing to push the market prices downward. In particular, wholly new areas that are now available to rent are being offered for very low prices in order to attract tenants. While the quality of the properties are good, the fact that they are currently in areas that still have a large number of buildings under construction and un-finished infrastructure means that landlords have to offer the properties for a lower price than neighbouring, mature areas.
The effect of this across the market is that the mature apartment areas such as Dubai Marina, Greens and JBR rent have to lower their rates in order to keep their existing tenants moving to these new areas offering much lower rents. Likewise, lower rents in the new villa communities have forced drops in established areas such as Springs, Meadows and Arabian Ranches rent.
Dubai apartments in the Palm Jumierah have seen slower falls as there is not much more if any supply to come that may affect Palm Jumierah rent prices. The palm island rental market is showing some resilience due to limited supply potential. Prices for the villas here have actually shown an increase, which is a positive sign for Dubai real estate scene and points to the issues of price being one of oversupply as opposed to a more fundamental economic one.
In conclusion, the fundamentals of the UAE property market will see it have a good long term future. This is shown in areas that have witnessed some prices rises where supply is limited. Largely, rental rates will continue to fall this year due to oversupply expected. This will come in two forms, one from the addition of new buildings in established areas and secondly from availability of new master projects in Dubai that will be completed. Often in oversupply situations price may not be the only deciding factor as would be tenants are able to choose between areas that offer better quality and facilities. The end of 2011 may even see some areas largely unoccupied if they fail to offer the amenities that other areas offer despite the lower rental rates.
