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Rents continue to drop in the UAE

These days one of the hot topics we are discussing about  in the UAE is the rents continue to drop in the UAE. As an expat living in the United Arab Emirates (UAE) when somebody asks my advice about Emirates, the first topic is definitely “Rents”.  Yearly rent for a studio was  around 15.000 USD in 2015. So it is a topic to talk…

As an expat living in the United Arab Emirates (UAE) when somebody asks my advice about Emirates, the first topic is definitely “Rents”.  Yearly rent for a studio was  around 15.000 USD in 2015. So it is a topic to talk…

Two years before when the rent increase law(rent cap) which was limiting the rent increases have been taken on hold and the rents hiked all of a sudden more than 15% in some properties in Abu Dhabi and other emirates as well. Everybody was thinking that the rents will continue to hike.

But the sudden decrease in the oil prices showed its effect and rents started to drop (some says maturing :))  at the end of 2015.

But I was not expecting the rent drops would continue in 2016 but to settle down.

First, The news article referring a report “Rents continue to drop as property market matures” at Big 5 website confirms me;

The report, issued by Core UAE, the real estate consultancy affiliated with Savills, compares rental declines in apartments which have been in the range of 5-6 percent in areas such as DIFC Downtown, Dubai Marina and JBR (Jumeirah Beach Residence). Meanwhile, villas have seen declines of 3-12 percent since the beginning of 2015.

Secondly, yesterday a friend of mine, living in the newer part of the city called Reem Island happily told me that; the owner has decreased the rent around 1%. Which makes me write about the topic.

On the other hand, developers continue their projects but you can see a slow down in the new developments which is not good news for me as a construction professional.

Gulf Construction Overview 2014

value of projects in GCC
Value of Projects in GCC

Gulf is famous for its remarkable construction projects so get commercial and discuss about Gulf Construction Overview 2014. It seems like it will be another impressive year for Gulf Region but for Dubai my expectation is so high for next year that Dubai recently working on projects (FEED Phase) for Expo 2014.

Gulf Construction Overview 2014 Report is prepared by The MEED projects which is database covers over 12,000+ projects across 52 sectors and sub-sectors with over 17,000 key contacts in 18 countries within the MENA region. Meed projects also preparing a country-by-country assessment/report of the construction projects sector specific for the MENA.

Top construction projects awarded in GCC in 2014
Top Construction Projects Awarded in GCC / 2014

For detailed report you can visit MEED Projects website from here. I can say that it is a desirable source for the ones who/which is tendering/looking jobs in GCC. Also I would like to have a full copy too 🙂

Lets go through the highlights of the Report;

  • It is also one of the most challenging. Contractors must battle with each other to win work in a competitive environment where price is all important. They must deal with high temperatures, aggressive ground conditions, a multitude of import and visa requirements, projects where the scope can evolve daily, and a complex permitting landscape. ( My Note: Permitting is one of the major challenges for Infrastructure)
  • According to MEED Insight’s GCC Construction report, there has been close to $575bn in construction contracts awarded in GCC countries since 2005. A total of $221bn is currently under execution.
  • According to MEED Insight GCC Construction 2014 report, the region has a strong forward pipeline of projects with $420bn-worth of construction projects in the tender evaluation, design or study stages. Most immediately there is some $83bn-worth of projects in the tender stages. The largest segment of this is road
    and street work in Qatar and Saudi Arabia along with infrastructure for Saudi Arabian education projects.
  • In terms of known planned and un-awarded projects, Saudi Arabia remains the largest market thanks mainly to its huge housing, education, healthcare and railway plans. The UAE is the second-largest market, a position it is expected to consolidate as it continues to announce a raft of new real estate schemes. Such has been the acceleration in announced projects in the federation over the past six months, it is feasible to expect that the UAE may well overtake Saudi Arabia in terms of future construction project values. Qatar is in third spot thanks to its ambitious project plans, including the express way and local roads programmes,
    mega-real estate projects such as Lusail and Msheireb, and tunneling schemes on its metro network. The other three GCC states remain relatively small in comparison.
Construction projects out to tender by type and value
Construction Projects out to Tender by Type and Value