Dubai rental rates for villas surge in Q1

Rental rates for villas in Abu Dhabi and Dubai remained strong in the first quarter, driven by a surge in demand within well-developed mature and emerging villa communities.

The rental market in Dubai during the first quarter for apartments and villas increased over the preceding quarter, with average rental rates growing by 1.0 per cent and 4.0 per cent respectively. However, rates were still 10 per cent and 2.0 per cent less for apartments and villas when compared to the same period last year, according to the Q1 2021 UAE Real Estate Report by property management experts Asteco.

The first quarter 2021 Dubai real estate review issued by ValuStrat said residential rents in Dubai were relatively stable when compared to the previous quarter, as it registered less than a per cent decline during the January-March period. The real estate consultancy also noted a 3.9 per cent year-on-year hike in villa rents. “Tenants paid Dh55,000 average rents for apartments and Dh211,485 for villas across Dubai,” said the report.

The surge in demand for villas can be attributed to changing working and living habits. Office rental rates continued their downward trajectory with quarterly and annual drops of -3.0 per cent and -18 per cent, Asteco report said.

In the first quarter, no large-scale villa developments were handed over in Dubai, while apartment supply stood at nearly 2,000 units with notable deliveries in emerging communities such as Dubai Hills Estate and Dubai Creek Harbour. Office completions were marginal at 70,000 sq. ft. of space.

Dubai property prices also showed an increase in the first quarter, varying from 3.0 per cent for apartments and 6.0 per cent for villas.

“Although the impact on investment properties (educational, hospitality, and offices) has seen less activity, the villa segment witnessed a marked increase. For example, villa sales prices in Arabian Ranches, Meadows and Springs rose by 9.0 per cent on average over the quarter. Apartment sales also fared better with quarterly increases of 5.0 per cent in Jumeirah Village and Dubai Sports City,” said the report.

Residential market in Abu Dhabi delivered around 1,700 apartments and 50 villas during the first quarter of 2021 with an increase in demand for villas, particularly within well-developed villa communities such as Yas Island, Al Raha Beach, Saadiyat Island as well as the Al Reef community. Although average villa rental rates remained more or less unchanged over Q1 2021, there was a significant increase in rents for West Yas, Golf Gardens and Saadiyat Beach Villas.

In Abu Dhabi, demand for completed villas for sale remained high in Q1 2021, predominantly driven by the limited availability of quality properties offered at attractive prices. Affordable communities such as Al Reef also noted heightened interest and hence an average quarterly rise in sales prices of 7.0 per cent. Conversely, apartment sales prices remained broadly unchanged over the last three months due to limited demand in this sector.

“Although the average Abu Dhabi rental market for residential properties remained relatively stable in Q1 2021, with a large majority of tenants looking to upgrade or upsize due to increased affordability within the mid to high end sector and the continued incentives offered by landlords, the office sector remained one of the most challenged asset classes in the emirate. Landlords also increasingly offered incentives related to payment and lease terms. Several Grade A and B office buildings experienced a rise in demand from Chinese and Israeli companies looking to establish a base in Abu Dhabi,” said the report.

In Al Ain, as tenants took advantage of lower rental rates real estate market activity increased in the quarter. Apartment rental rates across the Northern Emirates remained more or less stable over Q1 2021 with marginal declines of -1.0 per cent for high end properties in Ras Al Khaimah and Fujairah. Apartment sales prices in Sharjah also increased by 3.0 per cent over the last three months. — issacjohn@khaleejtimes.com