Despite rents for both villas and apartments in the UAE increasing during Q4 2011 by 11% and 3% respectively when compared to Q3 2011, it is expected that property rents will hit rock bottom in 2012 before an increase occurs in 2013, according to a report by Jones Lang LaSalle.

Alan Robertson, CEO, Jones Lang LaSalle MENA said, "2011 was a difficult year for real estate investors with most sectors of the market moving in the favour of tenants, with lower (sales) prices and rentals. While these trends appear likely to continue into 2012, the main trend for this year is likely to be an increasing polarisation within each sector of the market. As the performance of the best quality projects will improve, average prices are expected to decline further in 2012 within this increasingly two tier market.

“As we enter 2012, the real estate sector will inevitably be susceptible to any potential geo-political changes within the region, with the recent escalation of rhetoric between Iran and the West being the major cause of uncertainty. The worsening European debt crises and its impact on the global economy will be the other major external challenge to the UAE real estate market in 2012.”

In comparison with Q4 2010 rental prices for villas were up 16% however apartment rents were marginally down.

In Abu Dhabi however, rents are expected to continue to remain steady and are unlikely to see the gains that rents in Dubai have had, due to the 28,000 units currently scheduled for completion in 2012.

The report stated: “Due to the significant development pipeline, rents will continue to experience downward pressure. This will help decrease the rent premium that Abu Dhabi has maintained over Dubai to date.”