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Dubai rents jump 22pc

DUBAI - Residential rents in Dubai shot up 22 per cent year-on-year, but still lower compared to the previous figure, data released by Asteco Property Management, a property services consultancy firm in the UAE, show.

Residential buildings along Shaikh Zayed Road continue to be the most expensive, recording the highest annual rental growth of 51 per cent. Bur Dubai and Ghusais areas posted increases of 42 per cent and 40 per cent respectively.

"Bur Dubai continues to hold its position as the preferred location offering a variety of conveniences, transport options and entertainment despite traffic woes," Asteco said in a statement yesterday, adding that the area has an occupancy rate of 90-95 per cent.

Annual rents for studios and one-and two-bedroom apartments on Shaikh Zayed Road, Downtown Burj Dubai, Jumeirah Beach Residence and Dubai Marina range between Dh75,000 and Dh220,000.

The most expensive three-bedroom apartments are at the World Trade Centre area which command a whopping Dh410,000-590,000 per year, Asteco said, citing its latest study.

Asteco also said that land prices, which rose 50 per cent to Dh400 per sq ft during the second-quarter of 2007, are also a key factor affecting development costs and rental fees. Analysts have also noted a drop in the growth rate of rental fee increases in Dubai because of a rent cap and as more projects are delivered to the market, but said they do not advocate more government restrictions on the rental property sector.

Further regulation of the market, which could eventually correct itself, would only scare off investors, according to Tariq Ramadan, the chairman of Richville Advisory Group, a Dubai-based real estate advisory and marketing company.

Marcus Arbourne, the head of research, consultancy and valuation at Asteco, noted that the slowdown was due to the two-year five-per cent rent cap being imposed by the government and as more property projects have been finished.

"The market will adjust itself in time," Ramadan said. "Hopefully, the market will become mature-I would not say saturated-with equal supply and demand, and the prices will be adjusted." He and Arbourne said rental fees are also seen to become stable by late 2010 or early 2011, except those for new units that are seen to rise depending on the amenities being offered in buildings. "We will see a decline in the growth rate of rental fee increases because of the completion of more projects in both freehold and non-freehold properties," Ramadan said, adding that the rent cap has been helpful to many tenants, although it does not protect the new ones.

jose@khaleejtimes.com