A Time to Invest: Dubai Property Prices Plummeting Faster than Rent Rates


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Are you toying with the idea of buying property in Dubai? Well, it is time to strike the iron as it is proverbially hot at the moment: Dubai property prices are sinking noticeably faster than rent rates, according to real estate companies in Dubai.

The very latest residential market data indicates sale prices have sunk by 4% in the last quarter, while rent rates have gone down by a mere 2%. And, if we take into account the last 12 months, Dubai property prices have actually gone down by 8% year-over-year, while rent rates have remained more or less the same.

Abu Dhabi has witnessed the same market conditions, though rental as well as sale price changes are less pronounced. Over the last quarter, prices have gone down by just 1%, though rent rates have increased by 1%. Seen from a 12-month perspective, prices have fallen by 3% year-over-year, and rents have seen a 2% rise.

How Does this Shape Things for Investors?

As an investor, you can enjoy increasing yields in both Dubai as well as Abu Dhabi, which certainly make for highly attractive investment markets. Though, developers are getting into off-plan projects while offering discounts for completion with compelling payment plans, so they too are competing for cash to be had in this market.

The International Monetary Fund (IMF) published a report recently where it was observed that gross rental yields on property for sale in Dubai have gone up since mid-2014: a 6% year-over-year increase up til March this year.

Do ALL Real Estate Companies Share This Outlook?

Some industry analysts foresee a 10-20% decline in Dubai property, given the flow of new supply. Others see capital values taking a steady dive and claim that the rental market has seen more resilience than sales – rental properties boast high demand, while job-creation levels stand out, especially as the 2020 Dubai Expo closes in.

Another “industry expert” is of the view that this difference between sale and rental prices is simply the result of an ongoing but temporary lag which will iron itself out, once more units emerge in the market, resulting in faster sinking rent rates. It was forecasted that 16,000 units will be handed over this year in newer areas such as Jumeirah Village Circle and Dubailand.

These observations also report a modest 3% sales drop and a humble 2% drop in rent rates in the second quarter of 2015. According to these analysis, it is predicted that there won’t be much of an increase or fall either, and, more lucrative yields should coax buyers into investing in the secondary market. It is believed that investors will not be shy to embrace property which will become more affordable though prices are not really going to fall by a wide margin.

One industry analyst concluded that in the last year or so, Dubai Marina property prices have dropped by 15% compared to last year – on one hand, there won’t be any more price cuts, on the other, a sharp rise in transactional activity is expected.

Since prices have dropped, no matter how you look at it, more investors are confidently starting to take a slice out of the market. Why not hire the expertise of a seasoned real estate company in Dubai to make sure you’re making investments in the right market and enjoying the highest yields?


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