Majority of residents in Dubai are expecting rents to rise on renewal with families already reporting an increase in newly agreed rents during the three months to October 2015, according to Emirates NBD’s latest Dubai real estate tracker.
“Households reported an increase in newly agreed rents during the three months to October. Moreover, 54 per cent expect a rise at their next rent review, while only 11 per cent foresee a fall,” revealed the report, released on Monday.
Real estate agents indicated another upturn in new letting enquiries with the higher levels of new rental enquiries reflecting a robust upturn for apartments, but a reversal for villas in October.
Anecdotal evidence cited favourable demand conditions and demographic factors as reasons for increased new rental enquiries. Average rental prices picked up again, but at the least marked pace since the (ENBD) series began in April.
Slower declines in average selling prices were recorded for apartments and villas during the survey period. Moreover, the index measuring overall new buyer enquiries rose in October, the highest reading since April.
By property type, a stabilisation in new buyer enquiries for apartments contrasted with a further reduction in new sales leads for villas. Latest data for international new buyer enquiries signalled a further decline during October, but the rate of contraction eased from August’s low.
The report, however, referred to “an accelerated fall in transaction volumes” as a main negative development since August.
While some real estate agents noted that their reduction in sales volumes simply reflected a seasonal slowdown, others reported that buyers had adopted a “wait-and-see” approach given heightened economic uncertainty. In some cases, agents noted reluctance on the part of vendors to reduce prices in line with current market conditions.
“The Dubai Real Estate Tracker survey is consistent with reports of a correction in the residential real estate sector, but the pace of price declines appears to have moderated in the three months to October, compared to the peak summer months,” Khatija Haque, Head of MENA Research at Emirates NBD, said.
“There was an improvement in the new buyer enquiries index and the new international buyer enquiries index, particularly for apartments, suggesting there is demand at the right price. Data for the residential lettings market is also encouraging, with agents reporting rental price growth for both apartments and villas in the three months to October,” she added.
Looking ahead, Dubai real estate agents are optimistic overall about the prospects for property values over the next 12 months, with 38 per cent expecting a rise against 34 per cent that forecast a reduction. Besides, that report found 57 per cent of households were expecting a rise in their property value over the year ahead, while only 25 per cent anticipate a decline.