Rental rates in Dubai keep going down

22 October 2016
In August rental rates in Dubai decreased by 5% on the average, though rates for different apartments still vary, and some accommodation even became more expensive. released a report saying that the rental rates in Dubai decreased by about 5% in August, though the average revenue from apartment and villa rent remained almost without change, 5.6% per annum. It is worth noting, that rental rates in Abu-Dhabi keep going up, and renting a studio in Dubai is now even cheaper than in Abu-Dhabi.

Though it doesn’t mean we should expect a massive migration of residents from one emirate to the other any time soon. Still, there are much more factors that define attractiveness of a rental proposition.

[caption id="attachment_2984" align="alignnone" width="900"]rental rates in Dubai Studio in Dubai, The Address Dubai Marina[/caption]

Rental rates in Dubai in the end of August

Average decrease in studio apartment rentals throughout Dubai is 3000 AED a year, the rates dropped from 57000 AED in the end of July to 54000 AED as of the end of August. It is a bit more complicated with multi-room apartments: 1. Renting a one bedroom apartment became 1% more expensive and cost about 93000 AED; 2. Renting 2BR apartments became 2% cheaper, average rental rates in Dubai remained on the 142000 AED mark; 3. It was possible to rent a 3 bedroom apartment for 197000 AED on the average, which is 4% cheaper than in July; 4. Finally, apartments and houses with four and more bedrooms were available for rent in August for about 304000 AED, rental rates in this category remained the same as in July.

The analysts are quite certain in interpretation of this data. The most demanded 1BR apartments are going up in price because of the constant grow of demand, which is not fully covered by propositions from developers.

On the contrary, there are numerous inexpensive studios in Dubai, and every month more and more studios are developed and put up for rent, so many that they don’t get fully occupied. In addition, the primary target audience of such studios are low-paid workers, who keep renting apartments outside Dubai and who aren’t very eager to occupy the peripheral areas, which are not convenient if you want to get to the center easy and quickly. As a result, the supply in this segment of the market exceeds the demand for such accommodation, which surely affects the rentals.

In August the average rental rates in Dubai got decreased by 5%, and what is more, it not only affected the most expensive apartments, but studios as well.

Rental rates in Dubai for 2BR and 3BR apartments keep decreasing due to numerous launches of new projects and lack of demand among tenants. Many of those who can afford renting 2BR or 3BR apartments prefer getting mortgage for smaller apartments. And 3BR apartments are also becoming cheaper along with the general decrease in rates for luxurious lodging in the emirate. [caption id="attachment_2050" align="aligncenter" width="1024"]rental rates in Dubai Villa in Dubai[/caption]

Generally, the tendency is quite clear: the market is changing its orientation towards less expensive accommodation, the demand induces the emergence of more affordable apartments, and the city itself is becoming more convenient for living. It could be that before the winter rental rates in Dubai will decrease a little bit more, and then the decline could be stopped with an influx of tourists.

And what’s there in Abu-Dhabi?

The average rental rate for Abu-Dhabi in August was 130000 AED. The rental rates for studios remained on the same level as in July - around 56000 AED, and 1BR rentals were around the mark of 91000 AED - 1% cheaper. 

The average rental for a 2BR apartment increased to 132000 AED, for 3BR - decreased by 1%, to 17100 AED. Renting apartments and houses with 4 and more bedrooms became 5% cheaper, about 235000 AED.

Changes in rental rates in Dubai and Abu-Dhabi in August

In the meantime, studios in Abu-Dhabi remain very attractive for tenants due to the proximity to the city center, therefore there’s no point expecting a dramatic decrease in rental rates for this type of lodging anytime soon.

Generally speaking, the analysts conclude that rental rates in Dubai and Abu-Dhabi are changing mainly because of the growing number of propositions.

This certainly cannot be regarded as a decline of the market.

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