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Dubai apartment rents increase by up to 25% in some areas
Analysts expect rentals will continue to increase for the remainder of this year
WAM file
Rents in most of Dubai’s areas are growing at a double-digit rate, led by Dubai Marina, Jumeirah Breach Residence, Jumeirah Lake Towers and Palm Jumeirah.
Interestingly, rents in affordable areas such as Deira, Dubai Sports City and Jumeirah Village are also increasing at a double-digit rate as the population continues to expand with more job-seekers coming in search of greener pastures.
Real estate analysts expect rentals will continue to increase for the remainder of this year, albeit at a slower pace, and reach 2014 level by the end of 2022.
According to a study released by Asteco, Dubai Marina saw 25 per cent increase in rentals in the first quarter as compared to same period last year, followed by Palm Jumeirah, Jumeirah Beach Residence and Jumeirah Lake Towers at 22 per cent and Jumeirah Village Circle and Greens at 21 per cent.
Meanwhile, affordable areas such as Deira, Dubai Sports City and Jumeirah Village recorded 11 per cent, 15 per cent and 21 per cent increase in rentals, respectively. While Discovery Gardens and International City saw two per cent and five per cent increases, respectively.
Most of the demand for the property has been witnessed in the mid-to-high-end segment but unabated demand for rental property is now shifting towards affordable areas as well as continued economic and visa reforms are attracting young professionals and high net worth individuals to the emirate. According to Dubai Statistics Centre’s latest data, Dubai’s population has increased by over 100,000 since 2020, crossing 3.5 million mark in April for the first time.
“Average apartment and villa rental rates continued to grow in the first quarter of 2022, particularly in quality developments, with quarterly increases of four per cent and five per cent, respectively. Rental rates across all major asset classes are expected to increase further for good quality properties, albeit at a slower rate,” it said.
Taimur Khan, head of research for Mena at CBRE in Dubai, said average rents in the 12 months to April 2022 have increased by 16.2 per cent, with average apartment and villa rents increasing by 15.1 per cent and 23.5 per cent, respectively.
Prathyusha Gurrapu, head of research and advisory at Core, added that apartments in Palm Jumeirah continue to lead with a rental spike of 38 per cent year-on-year, followed by Dubai Marina (34 per cent) and The Greens and The Views (24 per cent).
Rents to increase further
Gurrapu added that while improving at record pace, these rents are still below 2014 peak values, with villas lagging by 16 per cent and apartments by 33 per cent.
“However, we expect at the current pace, city-wide villa market rents to reach the 2014 mark by end of this year and apartments rents following through. We are seeing many tenants trying to find support from the Rera rental index to avoid sharp rises that landlords are asking for during renewals. However, new leases are driven by market conditions with many landlords, particularly of units in sought-after buildings and districts achieve asking prices,” she added.
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Asteco noted that rental rates across all major asset classes are expected to increase further for good quality properties, albeit at a slower rate.
“However, the underlying fundamentals pertaining to supply and demand may curtail sustained real estate market growth. One major concern in regards to oversupply will be the retention of tenants amidst growing competition, as well as attracting new ones. There is a fundamental need for wealth-creating industries in order to generate more employment and business opportunities and increase the Emirate’s population,” it said.
waheedabbas@khaleejtimes.com
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