Residential property rents in Dubai have continued their decline and since April 2010 have fallen by up to -22%, according to a recent report by Landmark Advisory.

One bedroom apartments on the Palm Jumeirah have fallen by -6%, whilst in JLT they have dropped a further -10%. In areas such as International City, the lower rates for studio apartments have decreased -12%, with upper limits for both studio’s and one bedroom apartments falling on average by -22%. The lower limit of lower quality two bed apartments in both West and East Dubai have also declined by an average of -7% since early May 2010.

Jesse Downs, director of research and advisory services, Landmark Advisory, said: “Tenants are increasingly seeking more value for their rental dirham and are able to leverage alternative options to negotiate very attractive deals. This is pushing up bid-ask spreads and illustrates that landlords are conceding in negotiations with ever more discerning and value-seeking tenants. More significantly, this is a trend now observed in high quality units in prestigious locations, which is a segment that has experienced relatively minimal volatility in late 2009 and the first quarter of 2010 due to relocation trends.”

The report also claims that there has been an increase in rental demand in Dubai due to tenants relocating from surrounding emirates such as Abu Dhabi in order to take advantage of a better lifestyle and lower rental rates.

Downs said: “The imminent delivery of Abu Dhabi’s Marina Square will inevitably sway some existing or potential commuters to rent an apartment in Abu Dhabi, which will clearly hurt rental demand in Dubai. Rents in the capital are coming down and will continue to do so, especially in Q4 2010 and Q1 2011.”

Well established areas such as Downtown Dubai which have a limited supply pipeline are also experiencing additional rent declines due to neighbouring areas, such as Business Bay and Sheikh Zayed Road, seeing continued supply entering the market.

Downs said: “While these areas are not of comparable quality to Downtown Dubai, the impact on this increased supply is evident, lower limits for two beds in Downtown Dubai are falling -5%, at the same time that lower limits in Business Bay and Sheikh Zayed Road have fallen by -12% and -6% respectively since the beginning of May.”