While the Dubai real estate market for property sales is still struggling to show signs of recovery, the Dubai rental market is now showing positive indications of stabilisation across some areas. However, certain areas are witnessing price drops largely due to supply. In addition, the lower end of the market in new developments such as International City and Discovery Gardens also shows rental value decline. Where supply is balanced against demand and local amenities are present, rental values have stabilised and in some cases have increased.
The reason for the stabilisation is largely down to economic confidence and job stability. This confidence is buoyed by recent surveys that show companies are hiring or planning to hire in the near future. These additional jobs will bring in more foreign nationals to Dubai, who will need housing, as well as potentially increase the spending power of existing residents.
However, rental values are not expected to increase by any significant margin over the next year even if the Dubai population increases through new jobs. The expected supply will at the very least meet this demand and most likely exceed it. Areas such as Palm Jumeirah and certain villa communities should hold their prices through the year and potentially see increases as there is very little potential for extra supply.
A case in point is the Palm Jumeirah villas where supply has been static for the last year. Garden homes (4 -5 beds) have seen their rental value increase from AED 300,000 at the peak of the market crisis to over AED 400,000.
