Confidence could drive up Dubai rents by up to 17%

Confidence could drive up Dubai rents by up to 17%

ABU DHABI — Rental values in Dubai rose an annual rate of between seven and 10 per cent over the past three months, with analysts forecasting up to a 17 per cent rise for the year.

While the regional trading hub has witnessed renewed business activity creating more jobs and more business opportunities, Abu Dhabi rents have fallen five to 12 per cent over the same period due to the arrival of new housing units.

Rise in rents attributed to a gradual shift in the supply and demand equilibrium. — KT file photo

“The UAE’s real estate sector is enjoying a steady uptrend in the first few months of (the) 2013 market characterised by more consistency and consolidation within the primary markets of Dubai and Abu Dhabi,” said Masood Al Awar, chief executive officer of Tasweek Real Estate Marketing and Development, which released its latest market intelligence report on Saturday.

Tasweek predicted a sustained rebound within the coming months, driven by rising confidence in the Dubai market and strong market fundamentals in Abu Dhabi. The firm forecast a 10 to 17 per cent average increase on rental rates in the Dubai market in 2013, driven by several new project announcements made in late 2012.

More responsive legislation and robust real estate laws are also expected to quell local fluctuations on services and returns across the industry.

Al Awar noted that there were some concerns that must be addressed in order to sustain organic growth, such as affordable housing and varying financing options for real estate customers.

Confirming the latest trends in the property market, Dubai-based property brokers Props Square managing director Faisal Baig linked the rise in rental values to a gradual shift in the supply and demand equilibrium over the recent period.

There were property buyers in the market as well as tenants looking for units, he said.

Baig said buyers from Syria, Pakistan and Russia wanted properties, as they expected the values to rise further.

The Tasweek report said the emirate’s recent posting of a 34-month closing high on its stock market index boded well for its investment outlook.

“Barring major construction delays, around 36,000 new apartments and villas could go online from 2013 to 2015. Amidst broad options, Dubai tenants are expected to go for localities offering quality units and amenities,” the firm said.

Most of the residential supply was expected in locations such as Dubai Land Residences, Motor City, Dubai Sports City, and Liwan.

Looking forward, major developments in the pipeline such as the Dh6 billion Blue Waters Island, a Dh3.7 billion hotel and branded serviced apartment project in Downtown Dubai and the announcement of a Dh3.67 billion investment influx by the Investment Corporation of Dubai (ICD) and Brookfield Asset Management reflect the resurgence of Dubai’s property market.

Nationwide, the recent announcement of planned property regulations aimed at settling down prices and eliminating market speculation has prevented what could have been a spiraling of rents in 2013.

It has been reported that the UAE Central Bank has declared that a proposed cap on mortgage lending will sit at 75 per cent of the property’s value for expatriates and 80 per cent for UAE Nationals.

Al Awar added that this year will build on the transitional nature of 2012 to make the UAE property markets more robust and sustainable.

He advised all sector players and stakeholders to closely monitor market movements to take advantages of opportunities that are quickly arising in what Tasweek believes will be a watershed year for the business.

More news from