29 April 2013

Dubai Marina loses its appeal as rents fall

Property in Dubai Marina appears to have lost its shine among renters. While average rents have increased across Dubai, they have started to decline in the once hotly contested area.

While different analysts have recorded varying degrees of decline, they all say the same thing: renters are looking for somewhere cheaper or are sick of worsening traffic congestion.

According to Jones Lang LaSalle (JLL), rents in the marina fell 0.2 percent during the first quarter of 2013 compared to the last quarter of 2012. During the same period, they increased 1 percent across the emirate.

Property analyst Reidin said rents fell 0.7 percent in Dubai Marina-proper and 3.3 percent in JBR during the same period.

Classifieds website dubizzle.com also recorded no growth in the average advertised rental price of one- and two-bedroom apartments in the Dubai Marina, which was the only area unable to continue its upward pressure on rents.

Average advertised rents remained at AED80,000 ($21,800) for a one-bedroom apartment and AED120,000 for two beds.

The results follow a 10 percent rise in the past year.

Dubai Marina, including JBR, is the third most expensive area to rent an apartment, after Downtown and Palm Jumeirah, which both continued to record significant growth of 4-11 percent during the first quarter.

JLL head of research Craig Plumb said renters were turning their attention to other areas, such as Business Bay and Downtown.

“Partly, there’s still quite a lot of new supply coming on [to the market] in [Dubai Marina] and you do have some choice in these properties,” Plumb said.

“Also there has been a bit of a shift as people start relocating to cheaper locations. There’s more property coming on now, for instance in Business Bay, so people are choosing to move back down to Business Bay.

“Prices in the marina are a little bit higher than most of the areas and therefore if you had a 10 percent price rise in rents [last year] … that’s causing people to look for cheaper locations.”

dubizzle.com spokeswoman Ann Boothello agreed. “The marina may have reached some level of saturation,” she said.

“Downtown Dubai on the other hand has more eyes on it and it has new developments coming up making the community as a whole very attractive thus increasing prices.”

Meanwhile, REIDIN data manager Ozan Demir said construction work related to a new tram line was impacting residents’ desire to live in the area.

The 10-kilometre line will link JBR and the Marina with the metro and has been under construction for nearly three years, causing the number of traffic lanes to be halved in many parts of the area. Taxis are known to refuse fares to JBR due to the congestion.

The Roads and Traffic Authority has said the project would be completed by the end of the year.

“We believe that this will affect the prices in a good way once all the works are completed, but in the meantime these works are causing a lot of traffic jams,” Demir said.

“The metro line has become very important on defining the price trends in particular areas and Dubai Marina is one of the important areas on this perspective.”

Investors continue to show some appetite for the area, however. Sales prices increased 1.9 percent in the first quarter, although that was less than the average of 3.1 percent across Dubai, according to JLL.

Source: www.arabianbusiness.com