Rents for one-bed apartments show biggest increase in UAE

DUBAI — The inflow of single expatriates to the UAE is driving up the rental price of one-bedroom apartments to such an extent that rents in this sector are now rising faster than any other. One-bedroom apartments in Dubai, Abu Dhabi and Sharjah saw an average increase in annual rental prices of 29 per cent, 33 per cent and 40 per cent respectively compared to last year, according to research carried out by Dubai-based property services company, Asteco.

By Lucia Dore

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Published: Tue 12 Sep 2006, 9:40 AM

Last updated: Sat 4 Apr 2015, 4:20 PM

The main reason for the rental price hike across all the emirates is the continuing escalation of rents in Dubai, forcing tenants to move to other emirates. "This is one of the main reasons why demand for apartments in Sharjah has risen so much, subsequently pushing up rent prices," said Asteco's director consultation, research and valuations, John Allen.

The research found that Sharjah's Al Rolla area recorded the highest increase in one-bedroom rents which jumped from Dh18,000 in 2005 to Dh32,000 this year — a 78 per cent increase. And in Abu Dhabi's Corniche Street, rents rose from Dh46,000 in June 2005 to Dh60,000 in June this year. Similar increases were recorded elsewhere in the emirate.

In other emirates too rents are soaring. In September 2005, the rent in Ajman for a one-bed apartment ranged between Dh15000-Dh17,000 but this has now risen to Dh30,000, according to people interviewed in the emirate 10 days ago by Khaleej Times. Rent for a two-bed has increased from about Dh20,000 to Dh45,000. And according to recent tenant seekers in Ras Al Khaimah, rents for a two bedroom apartment have jumped from Dh22,000 to Dh50,000 plus.

The move to emirates beyond Dubai has been forced on many tenants as rentals there have rocketed. In Dubai, rent for a one-bedroom apartment on Shaikh Zayed Road shot up from Dh65,000 in June last year to 90,000 in June this year, a 38 per cent increase. And at the Greens, rents also rocketed 38 per cent from Dh58,000 to Dh80,000.

The Greens also recorded the highest increase in rents for two and three-bedroom apartments with rents at around Dh125,000 and Dh145,000 — a 74 per cent and 53 per cent increase over last year's prices respectively.

The problem is magnified by the forced eviction of many tenants in Dubai, especially those who have lived in their rented premises for one year or less, on the often-used excuse that the accommodation is needed for "family reasons". By removing incumbent tenants landlords are in the position to ask rents well above the 15 per cent cap, rendering it wholly ineffective and unenforceable. The cap is due to be removed later this year.

The ineffectiveness of the cap is reflected in a 25 per cent average increase in rent for one, two and three-bedroom apartments in Dubai. In Sharjah, the average increase was 35 per cent, and Abu Dhabi 29 per cent, according to Asteco.

There is hope, however, that rents are about to stablise. Allen said: "More than 280,000 residential units are expected to come up by 2009. This will definitely meet increasing demand and help stabilise rental prices in the UAE."

Recent reports, however, point to the fact that rents could soon stabilise rents with 56,000 properties (perhaps even more) forecast to become available by the end of the year, with only 45,000 people expected to move to Dubai.

And Allen said, "More than 280,000 residential units are expected to come up by 2009. This will definitely meet increasing demand and help stabilise rental prices in the UAE."

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