Dubai’s residential rents declined during the second quarter of this year, according to a report published by the local Abu Dhabi Islamic Bank (ADIB) and Dubai-based real estate firm MPM Properties.

The 3 per cent decline recorded in the second quarter is understood to be a result of 6,750 new units being delivered in the last three months. According to the report, the new surge of residential units takes Dubai’s total stock to 479,000 units with the International Media Production Zone (IMPZ) contributing 25 per cent of the new supply.

The report goes on to say capital values for completed apartment units fell 3.5 per cent this quarter, with average sale prices in the Business Bay area falling the most with a 5 per cent decline.

Dubai’s office market continues to perform steadily despite additional space expected to enter the market by the end of the year. The report also states that rent for prime retail space has increased by 6.4 per cent in the last three months, as new retailers struggle for space.

The report concludes that additional supply and dwindling Russian tourist numbers have impacted the luxury segment of the hospitality sector, although double-digit growth in tourist numbers from India, China and other African countries has kept the budget segment stable.

In June, US ratings agency Standard & Poor’s (S&P) released a statement as part of a report, saying additional supply with a dampening on demand in the UAE property market is likely to result in a moderate 10-20 per cent correction. Despite this, S&P says this contraction is “much less than what led to the Dubai crisis in 2009”.