Those who say apartments market in Dubai is under constant pressure are wrong. This is true that villa market is currently outperforming the apartment market in Dubai but claiming no growth for the apartment’s market would not be justified at all. Though the initial small spurts of growth were seen in villa prices in Dubai during 2011 but the fact that apartment prices have been slowly moving towards growth since the financial crises, must also be taken into consideration.
Average lease rates of apartments in Dubai fell by around 17% during 2010. This was a great fall indeed! 2011 started with no optimism about Dubai apartments but despite that the rate of decline slowed down drastically. Compared to the year before, the lease rates of the apartments on average fell only by 8% during 2011 clearing indicating a tremendous deceleration in the rate of decline.
The rate of decline slowed down on a quarterly basis and during the last quarter the lease rates only dragged down by 2% on average. This great slow down in the rate of decline led the experts to predict better times ahead during 2012 not only for the rental apartments but also for the apartments for sale in Dubai. Finally 2012 is here and it’s quite encouraging to know that apartments market is continuing its trend of improvement.
The Q1 of 2012 has reported an average rise of 1% in the rental values of apartments and villas. This indicates that there is finally something to cheer about the apartment market in Dubai, since the market has set its foot towards the path of recovery. On the other hand, this increase also revealed a lot of things about Dubai real estate such as:
· Apartments in quality locations are slowly reaching full occupancy and the rise is only in those serviced apartments Dubai which offer high quality of life.
· Rents of furnished apartments in Dubai (in city’s secondary locations) are either maintaining their downward trend or remaining flat.
· The increase in the rental value of apartments is also backed by the landlord’s incentives like rent free periods, easy monthly or bi monthly payments, no security and free utilities.
· The prices of Dubai apartments for sale in the most popular areas like Palm Jumeirah, Dubai Marina and The Greens are relatively stable due to being the best performing areas in Dubai.
· The new supply being added to the secondary locations, high service charges and low quality infrastructure are the reasons of the lack of demand and eventually lower rents.
Though the apartment market is currently fragmented but the overall performance is quite encouraging. The rate of decline is slowing down consistently that marks much better times ahead. The performance of Q1 has brought some good news for the apartments in Dubai but certainly there would be much more to cheer about in the near future.