Rents in Dubai have continued to vacillate according to area and unit type, with some lease agreements showing marginal growth and others continuing to fall, in some cases considerably, a report on the city's market in July has said. The declines have been blamed on a combination of increased supply and weak demand for specific projects or communities.
'Isolated rental adjustments are symptomatic of specific and transient patterns that are likely to stabilise in the short to medium term,' said Jesse Downs, director of research and advisory services at Landmark Advisory.
'Observers should remember that current price movements are not necessarily indicative of broader market trends. It is still too early to call a price floor.'
Some of the price increases reflect a move by tenants into larger or higher end units than they previously occupied. While rents for two bedroom properties in the Arabian Ranches development fell by between Dhs10,000 and Dhs20,000 - indicating a lack of tenant demand – some rents for three and five bedroom units rose by Dhs10,000 and Dhs50,000 respectively.
Conversely, while rents for studios and one bedroom properties in the International Media Production Zone rose in July, annual asking prices for larger five and six bedroom villas in Al Barsha fell by Dhs60,000 and Dhs90,000 respectively according to the report.
Rents in the Marina and Jumeirah Beach Residence developments on average showed increases during July.
Investors are also beginning to show renewed interest in the Dubai real estate market, with a number of funds and individuals watching pricing developments.
'We are starting to see a reinvigorated interest in the Dubai market, having received some very sharp corrections in the cycle. Investors are beginning to re-look at Dubai,' Ian Ohan, Head of Investment Transactions at Jones Lang Lasalle told AME Info.
'The one thing that happened in the 24 months prior to the correction was that Dubai became an extremely globally expensive city in which to live or be an occupier. With the adjustment in prices, I think that the value-for-money proposition is beginning to be reaffirmed.'
Despite the number of funds that analysts have said are on the sidelines of the market, there has yet to be any substantial investment in many of the city's asset classes. Ohan believes that, although the market will only properly begin to stabilise in 2010, an increase in bullish sentiment will see some deals concluded before the end of the year.
'The reality is that there are very few truly distressed assets that are available to be invested in, but there is a tremendous amount of money on the sidelines. We feel that there will be some pressure to deploy prior to year's end, particularly as there are some areas in Dubai that look like they have begun to bottom out and are starting to see some appreciation. Investors are beginning to anticipate a bottoming out in some areas, and may be concerned about not getting in at the bottom.'