Are you tired of paying high rent costs? Are you finding it just a tad difficult to keep up with the landlord’s monthly payment requests?
Finally, are you trying to save up for a vacation but it is not working out?
It’s all about to change – up to 14% in certain areas.
Asteco’s ‘UAE Real Estate Report Q2 2018’ has indicated an annual decline in villa and apartment sales and rental rates across the country.
Let’s check out where and why this is happening.
Where is it cheaper?
In the Northern Emirates, apartment rental rates continued to soften with an average drop of 2% since Q1 2018 and registered a decrease of 11% over the year.
Well that’s some good news.
High-end properties in Ajman recorded the highest annual decline of 13%, putting the average rent for a three-bedroom unit between $10,000 and $14,400.
However, the drop for the same unit type in Ras Al Khaimah was less pronounced at 7%, with rental rates averaging $25,000 per year. That’s to be expected since Ras Al Khaimah is a touristic area but the decline is still there.
In Sharjah, rental rates continued their downward trend dropping on average by 2% in the last quarter and 11% annually.
Start your next company in Sharjah?
Sharjah office rental rates recorded quarterly and annual reductions of 3% and 14% respectively.
John Stevens, Managing Director of Asteco, says that there is a decline, albeit a small one and is unlikely to bounce back in 2018.
In Abu Dhabi, apartment sale prices in the secondary market remained relatively stable over the quarter, despite registering an average decline of 8% year-on-year. The Gate area recorded the highest drop of 18% since 2017, followed by Al Bandar with a drop of 14%.
While apartment and villa rental rates witnessed annual declines of 10% and 9% respectively, showing comparable patterns to the last quarter. Rental declines for studios to three-bedroom apartments ranged from 5% to 18% over the course of the year. The highest drops in the villa rental market since Q2 2017 were seen at Golf Gardens (14%) and Al Raha Gardens (13%).
In Al Ain, villa rental rates fell by an average of 7% since Q1 2018 and 12% annually, with a more pronounced drop recorded for larger four- and five-bedroom units, particularly on properties where rates and incentives were not aligned with the market.
Stevens pointed out: “To attract and retain tenants, landlords continue to offer incentives of up to one month of free rent and flexible payment terms of up to 12 cheques.”
He also goes to add that rental rates are not just falling there is a new trend for tenants “They now appear to be taking advantage of the decline in prices to move to high-quality, self-sustained communities with supporting facilities. Such communities recorded high occupancy levels, in contrast to stand-alone buildings and villas that reported minimal uptake and high vacancy levels.”
In Dubai, villa and apartment sales prices declined by 4% over the quarter, with an annual drop of 11%. The decline in apartment sales was most prominent in Dubai International Financial Centre (DIFC), Discovery Gardens and Dubai Sports City that registered a 6% decline since Q1 2018. Meanwhile, the highest quarterly drops in villa sales prices were observed in Jumeirah Park (8%), Arabian Ranches (5%) and The Springs (5%).
Office renting bonanza
This quarter, the Dubai Government has made a number of announcements designed to promote foreign investment and investor confidence, which is likely to boost demand in the office market in the medium term, says JLL’s latest report.
Two key announcements have been made during Q2 as the government seeks to stimulate demand and support the office market.
These include a reduction in the fee charged on businesses by the Dubai Municipality from 5% to 2.5%, and the relaxation of existing regulations to allow 100% foreign ownership in businesses located outside of free zones.
The recent announcement of 10 year residency visas for certain categories of staff is also likely to have a long term positive impact on the residential sector.