Dubai housing “may become more affordable”
Contrary to the claims that Dubai’s property market has already seen the worst, a new report suggests that residential rents and prices are set to decline further.
In its latest research note, Phildar Advisory said that housing in Dubai may become more affordable in the coming months. Since rents peaked in May 2014, the decline has been gradual, equal to a compound monthly growth rate of –0.3 per cent. However, in May this year, the monthly rent decline reached –1.3 per cent.
“In a down-cycle, the lowest advertised rent is particularly sensitive to market shifts and can be the harbinger of market trends. By the beginning of June, the lower limits of asked rents decreased by 4.1 per cent, compared to the same week in the previous month,” it noted.
“Talk of a house-price floor is entering the media again, yet our research indicates rent declines are accelerating and will likely continue through the summer. This will inevitably pull sale prices down,” said Jesse Downs, Managing Director of Phidar Advisory.
Office rents also declined, particularly Strata office rents, but the market is undergoing fundamental shifts in development strategy. In spite of a 21 per cent vacancy, new office developments are under way due to the undersupply of Category A buildings owned by a single owner. Only four per cent of current office supply is both Category A quality and a Single Owner Asset (SOA), Phildar said.
“There is plenty of office space available, but most of this space does not meet tenant needs,” said Downs. “This has created long term opportunities for professional developers that can implement high-spec, tenant-oriented strategies.”
“Greater affordability in both the residential and office sectors will support businesses and the economy in the short and medium term,” she added.