7 Days reports that rents and occupancy rates in Dubai will fall throughout this year as expatriates leave as a result of the global economic downturn, according to CB Richard Ellis (CBRE) said today.
“The drop in demand for commercial and rental space, following the decline in an expatriate workforce, will have a significant impact on the lease and occupancy rates in all areas of Dubai throughout 2009,” CBRE said in a report.
Dubai's property sector is suffering a sharp slowdown, with real estate prices tumbling 41 per cent in the first three months of 2009, according to property consultants Colliers. The slowdown has led to project cancellations worth billions of dollars and jobs being slashed.
Prime office rents fell by around 18 per cent in the first quarter, compared with the same period last year, and residential rents dropped 23 per cent, it added.
The highest drop in rents occurred in Nakheel’s Discovery Gardens development, according to the report.
“During Q3 2008 the rents in the area were in the range of dhs90,000 to dhs110,000 for one bedroom. The current rents for a similar size unit range between dhs60,000 to dhs75,000, registering a drop of around 33 per cent,” CBRE said.
The firm expects rents to continue to fall throughout the rest of the year as expats leave the emirate. Dubai's population is set to fall 17 per cent this year, EFG-Hermes said in a report in March.
“As the demand of residential and commercial office is directly proportional to the influx of expatriate workforce into the Emirate, it is likely that the demand for both the above sectors in terms of leasing would remain in a slump during the remainder of the year,” CBRE said.
It added that it anticipated many projects due for completion this year are likely to be further delayed.
It was reported yesterday that the Dubai Land Department and the Real Estate Regulatory Authority have set up a committee that will decide on cancellation of “unviable” projects.
Cancellation of projects was previously not under these departments’ control, but amendments to Law No 13 regulating the Interim Real Estate Register in Dubai now allows them to cancel projects that they deem unfeasible, according to the reports.
that's the positive side of the recession
The rents are still not showing any decrease in some areas like Sheikh Zayed Road. The greedy landlords and property owners cannot accept that the prices are going down. Also, RERA is not saying the right story, is it?
I was surprised to see RERA's published rates a couple of days ago, because they are higher than what is available on the market. And now when school year finishes and summer vacations are approaching, more people are expected to either leave or send their family back home - I think rents in Dubai will come down drastically.