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Reasons for the Decline in Dubai Rental Properties


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The overall state of the economy has a profound impact on the thinking of its players or constituents at the local level. When the economy is good, there is freer flow of credit and commerce, with promotion of business dealing easy and quick. But when the economy is in a downturn, worries about the future result in a slump in business opportunities and the free flow of credit and cash also dries up. As fears escalate, they become the arbiters of their own destruction.

The resurrection of spirits and hopes is easier said than done and is very difficult to accomplish. It requires discipline and faith in the Government and everybody needs to do their bit in unison. It is swimming against the tide of current realities and that is what makes it so difficult. Even President Obama in the USA could not persuade the American public to change its mind and that is why consumer spending remains cautious in the light of the unemployment which has steadied at 10 percent for the last few months.

Let us now move to the real estate sector in Dubai and try to trace the reasons behind the decline in Dubai rental properties. One reason is the exodus of workers that took place in the wake of the property sector downturn. Almost overnight, hundreds of people began losing their jobs. Some were even fired over the phone while on vacation in their home countries. This is one of the worst ways to part with an employee and speaks of the unprofessional conduct of the Human Resources Department of that firm. Anyway what this meant was that a lot of rental properties became vacant. The owners of these properties had to adapt to the new situation and in consequence they had to offer new rentals at reduced rates or make other adjustments in the contracts so that the left over workers could be attracted to rent these properties.

The reduced rents even impacted the rates of Dubai hotel accommodation with some hotels having to cut their rates by as much as 50 percent just to keep occupancy going. The impact has even been felt on the shopping, dining, retail and other industries. All of these benefitted from migrant worker populations.

Then again there are some owners of rental properties that have holding power and others don’t. Many have an urgent need to rent or lease their property as the rental income partly pays for their livelihood. Others use the rental income to service the property’s own mortgage taken out with a bank. Whatever the reason, this can again affect the rates of rental properties.

Another point worth keeping in mind is the number of properties that are available for rent at any given time, versus the demand for such rental units. The ratio of demand to supply will determine the rentals in general in a given area of Dubai. History of rentals taken in the past and the level of infrastructure is important also, as the type and level of amenities, comfort and ambience offered can raise rental rates in a specific community like Dubai villas, marina properties, Arabian Ranches and springs or the Palm Jumeirah.

With the forecast for Dubai in 2010 being that an excess of 20,000 units is already anticipated, the market for Dubai rental properties does not seem promising. However additional new projects are not being picked up so eagerly, as it looks like Dubai itself will run out of land mass very soon.

Just Rentals Dubai is one of the most experienced firms looking at property for Rent in Dubai. You can also contact them for short term rentals Dubai, Dubai accommodation for rent, or indeed any kind of Dubai rent property.

About The Author

David Martin is a respected, well read columnist in Dubai and considered an expert on the economy and issues connected with living and working in the emirate. Expatriates like to quote him on everything from Dubai property for rent to how to live the lavish lifestyle and be part of the nightlife that Dubai has to offer, otherwise considered the prerogative of the wealthy and knowledgeable.

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