While annual rents in budget areas of Dubai, such as International City, have fallen to below AED15,000, the luxury market is still soaring, an Arabian Business survey has revealed.
The survey of Dubai’s most ostentatious rental rates revealed one 10,000 sq ft, 12-bedroom villa in Jumeirah comes complete with an annual lease of AED2.5m ($680,698).
For AED208,333 ($56,724) a month, the would-be tenants get a huge garden, five service rooms for drivers and maids, four living rooms, two kitchens, a child’s play area and parking for up to ten high speed cars.Alternatively, the PropertyFinder website lists a lavish Emirates Hills seven-bed villa for rent for one year for AED1.5m ($408,419) or the ultimate in rental exuberance: an apartment in the Burj Khalifa.For a year’s stay in the 80th floor of the world’s tallest tower you get a private terrace with hot tub, walk-in wardrobes, views of the Dubai Fountain and, finally, a fee of AED800,000 ($217,823).While prices for the rich and famous are still high in Dubai, Priyesh Patel from Dubai-based agency Aston Pearl Real Estate said the sector is only for the select few who can afford it and represents a very small market.
“I don’t actually see a demand for such expensive properties, it’s a very niche market, but there is always someone to rent these properties. Eventually it will get rented,” he said.
At the other end of the rental spectrum, Arabian Business reported this summer that rents in International City have fallen below AED15,000 ($4,084) this year, a sign of how wide the rental divide in Dubai has grown.
However, as a whole, real estate group Asteco has said there are signs Dubai's real estate rental sector is showing the first signs of stabilisation after nearly two years of turmoil.
The property management company said apartment rents averaged a decline of just two percent over the first quarter of 2011, although drops of as much as seven percent were seen in some areas.Its Q1 report said popular destinations such as Discovery Gardens and Dubai Marina fell by six and four percent respectively, but with high transaction activity due to increased affordability.
Villa rents and sale prices showed virtually no change since last quarter, Asteco said, adding that further declines were likely as more supply is set to be handed over in coming months.
Elaine Jones, CEO, Asteco Property Management, said: "The rental market stabilised in certain areas, with a downward trend in others, albeit at a lower rate. This is attributed to the pressure of new stock on the already oversupplied market, especially for apartments and offices. Internal movement is still high and is predominantly driven by a flight to quality and value for money."
She added: "Transaction activity is on the rise, and as sentiment increases this will continue, with returning stability also aided by finance becoming more readily available."
Patel echoed this and added that landlords had largely stopped dropping prices and tenants appeared to be happy with the asking prices offered.“Tenants are happy with the levels of asking prices and its becoming easier to rent now. Landlords are prepared to take more advice from agents and are agreeing on the prices we advise them, this makes our job much easier with tenants as there is less negotiation,” he said.