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Dubai: Dubai residents may be getting a slight breather from soaring prices this year as housing rents have levelled off in a few areas due to a surge in supply.
According to a report by property services company Asteco, rents for apartments in some areas in Dubai have either dropped slightly or eased off between the last quarter of 2007 and first quarter of 2008.
Average rents for studio apartments in International City have actually dropped by one per cent, while rates for one-bedroom flats in Dubai Marina slumped by 4.5 per cent.
Leases for other apartment types in other areas went up by as low as four per cent to as high as 36 per cent.
"Overall, rental rates in Dubai have seen no significant changes when comparing the fourth quarter of 2007 and first quarter of 2008, therefore implying a slowdown of the market," the report said.
Steep rise
However, a year-on-year comparison of rents would show that rates in some areas have significantly increased by as much as 36 per cent from first quarter of 2007 to the same period this year.
Asteco managing director Andrew Chambers said prices will still increase "but not at the phenomenal rate we have seen over the past three years. Residents and investors can be rest assured that as more projects are delivered, the market will stabilise in the medium term."
Chambers attributed the recent slowdown to the government-imposed cap, as well as the surge in apartment supply with the completion of International City and the handover of various buildings in Jumeirah Lake Towers and Downtown Burj Dubai.
"There are several reasons for this slowdown, including the recent availability of housing units...Needless to mention, the reduction of the rent cap from seven to five per cent has certainly had a desirable impact as well," said Chambers.
Statistics show that International City, which is located on the outskirts of Dubai, has the lowest rents with Dh42,000 for studios and Dh125,000 for three-bedroom flats. Asteco said this is due to International City's location and its target market, which are the middle-income workers.
On the other hand, Old Town Burj Dubai and Palm Jumeirah have significantly higher rates due to their prime location and exclusivity. Annual rents for studios and one-bedroom apartments in these areas are at Dh100,000 and Dh140,000 respectively.
A look at year-on-year rental changes in Dubai, however, showed the highest increases at the Greens for studios where average annual rents increased from Dh65,000 to Dh85,000, posting a 31 per cent rise.
Two-bedroom units at International City also witnessed a 36 per cent increase in rents from Dh70,000 to Dh95,000 when compared to the same period last year.
Average annual residential rents in Dubai for 2008
Studio flats
Greens: Dh85,000 (from Dh65,000 in 2007)
Dubai Marina: Dh85,000 (from Dh77,500 in 2007)
Old Town Burj Dubai: Dh100,000
International City: Dh42,000 (from Dh42,500 in 2007)
One-bedroom flats
Greens: Dh110,000 (from Dh100,000 in 2007)
Dubai Marina: Dh107,500 (from Dh112,500 in 2007)
Old Town Burj Dubai: Dh140,000 (from Dh120,000 in 2007)
International City: Dh58,000 (from Dh57,500 in 2007)
Two-bedroom flats
Greens: Dh155,000 (from Dh140,000 in 2007)
Dubai Marina: Dh150,000 (from Dh140,000 in 2007)
Old Town Burj Dubai: Dh175,000 (from Dh145,000 in 2007)
International City: Dh95,000 (from Dh70,500 in 2007)
Three-bedroom flats
Greens: Dh185,000 (from Dh1770,500 in 2007)
Dubai Marina: Dh200,000 (from Dh185,000 in 2007)
Old Town Burj Dubai: Dh200,000 (from Dh185,000 in 2007)International City: Dh125,000 (for 2007)
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