There was unwelcome news for fly to let owners in Dubai recently when reports emerged that rents in the emirate are continuing to plunge.

Studios in International City can now be snapped up for as little as dhs22,000 a year down from dhs60,000 18 months ago.

At the other end of the market, a studio in the world’s tallest building, Burj Khalifa, costs just dhs100,000 with one-bedroom apartments in the prestigious address starting at around dhs160,000 a year.

Property consultants say that although the prices may appear to be at rock bottom, they could fall even further in coming months.

“The present rents are the lowest in the last few years but we are expecting rents to fall even further, to the extent of five percent or more and then stablilise after that,” said Amarjit Singh, a property consultant with the Centurion Real Estate, on zawya.com.

However Matthew Green, head of research and consultancy in the UAE at CB Richard Ellis Middle East, said the impact of falling rents is making Dubai attractive again to residents across the country.

He said: “We will be seeing more and more people shifting to Dubai from Sharjah and the Northern Emirates due to low rents and the high quality of life. It’s a very good scenario for tenants.”

Rents in Sharjah and Abu Dhabi have also fallen. Lesley Preston, a director at Cluttons in Sharjah, said that a studio flat in industrial areas is just dhs18,000 now while in downtown it is around dhs24,000 a year.

“We are expecting the prices to go down further due to the power crisis,” she said. “People are struggling due to power cuts and are planning to move to Dubai which is not good for the Sharjah property market."

Despite calculating a housing over-supply of 110,000 to 115,000 by the end of 2012, the Dubai-based real estate and investment advisory firm Investment Boutique also believes that the emirate’s housing market will go on the upswing that year.

In its Dubai State of the Market 2010 Report, it predicts that prices will reach rock bottom this year and that banks will relax their lending criteria.

Because of the housing surplus, consultancy firm Jones Lang LaSalle believes that the Dubai residential market will not fully recover before 2011 at the earliest.

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