Dubai villas rents rise on demand surge for open space

Average rents of villas in Dubai rose by 2.6 per cent in the second quarter 2021, compared to the first quarter to outperform the residential average as apartment rents recorded modest declines of 0.5 per cent, according to the latest research by leading international real estate services firm, Chestertons.

Annually, villa rents surpassed their Q2 2020 average, rising by 3.5 per cent y-o-y.

“The rise in villa rents was principally driven by continued tenant demand for more open space and outside areas, with agents reporting a sustained increase in villa enquiries since the easing of social distancing restrictions last year,” Chris Hobden, head of Strategic Consultancy at Chestertons Mena, said.

“With work-from-home policies continuing across the private sector, even if on a part-time basis, we expect villa rents to outperform the wider residential average over the months ahead,” he said in a statement.

Palm Jumeirah saw the highest increase in villa rents, at 3.9 per cent q-o-q, followed by Jumeirah Golf Estates, Victory Heights and The Lakes, which recorded increases of 3.4 per cent, 3.1 per cent and 3.0 per cent, respectively. All other locations saw quarterly increases between 1.6 per cent and 2.3 per cent.

Average apartment rents in Dubai recorded modest declines over Q2, with a continued tenant preference for villas, coupled with long-standing oversupply, placing downward pressure across secondary locations. Apartment rents fell by 0.5 per cent on average and remained 8.7 per cent below their Q2 2020 level.

However, Downtown Dubai recorded a slight increase in average rents, at 1.7 per cent q-o-q, followed by Dubai Marina at 1.5 per cent and JLT at 1.1 per cent. DIFC saw the highest quarterly decline, at 3.4 per cent, followed by Discovery Gardens at 2.8 per cent. Both Dubai Silicon Oasis and Dubailand recorded 2.5 per cent declines q-o-q.

“While we expect apartment rents to face continued pressure medium-term, improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa, should serve to support demand,” Hobden said.

Dubai also witnessed a notable rise in residential transactions over the second quarter of 2021, with positive market sentiment and continued international buyer interest driving sales.

Total residential transaction value in Dubai increased by almost 50 per cent q-o-q to Dh31.02 billion, up from Dh20.77 billion the previous quarter. Total residential transaction value reached its highest level since Q4 2013, when residential sales totalled Dh31.67 billion. Residential transaction volume totalled 14,426 units, a rise of 35.48 per cent from Q1 2021.

Completed property sales accounted for 71 per cent of total transaction value and 59 per cent of volume in Q2 2021, with off-plan sales yet to approach their pre-pandemic share.

“With residential transactions at near-record levels, increased international interest has been a key factor, with Dubai’s handling of Covid-19 supporting post-lockdown demand from buyers drawn by visa reforms, the emirate’s quality of life and comparatively attractive pricing,” said Hobden.

“We have seen a clear improvement in market sentiment among UAE residents this year, with a desire to buy ahead of anticipated price rises, coupled with favourable mortgage rates and generous developer incentives, spurring sales.”

In Dubai’s villa sales sector, strong end-user demand and continued international buyer interest underpinned prices in Q2 2021. As a result, average villa prices increased by 5.7 per cent q-o-q, supporting a 9.1 per cent rise y-o-y.

The Meadows/The Springs saw the highest quarterly increases at 6.6 per cent with average Dh830 per sqft in Q1 2021. The Lakes followed closely behind with a 6.5 per cent increase to Dh1,065 per sqft from Dh1,000 the previous quarter. Jumeirah Park saw prices rise by 5.4 per cent, while Palm Jumeirah and Arabian Ranches saw 4.9 per cent increases q-o-q.

Palm Jumeirah was the only location to see a double-digit rise on an annual basis, with average prices increasing by 12.4 per cent y-o-y. The Lakes and The Meadows/The Springs also saw notable gains at 8.7 per cent and 8.6 per cent, respectively.

Meanwhile, apartment prices in Dubai saw a modest increase, with average values rising by 0.8 per cent q-o-q, although performance varied by location and prices remained 3.7 per cent below their Q2 2020 level.

The Views recorded the highest quarterly price rise, at 5.3 per cent, with prices averaging Dh1,085 per sqft, up from Dh1,030 the previous quarter. Downtown Dubai prices also increased by 4.5 per cent q-o-q. Both Jumeirah Lake Towers (JLT) and The Greens saw quarterly price rises of 3.0 per cent, reaching Dh765 and Dh860 per sqft, respectively.

Dubai Marina, Motor City, Business Bay and International City achieved more moderate quarterly price hikes of 2.2 per cent, 1.8 per cent, 1.5 per cent and 0.7 per cent, respectively. All other locations recorded quarterly declines of between 1.0 per cent and 5.1 per cent. Dubailand saw the sharpest quarterly fall, at 5.1 per cent to Dh590 per sqft, followed by Discovery Gardens, at 2.6 per cent, to Dh483 per sqft.

Downtown Dubai, The Views, The Greens, and Business Bay saw prices rise annually by 4.4 per cent, 3.3 per cent, 2.9 per cent and 0.3 per cent, respectively with all other locations experiencing price declines of 0.2 per cent to 12.4 y-o-y.

issacjohn@khaleejtimes.com