Dubai rent prices up 30%
Rental rates for the first half of this year have increased by almost 14 per cent
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Residential rents in Dubai have increased by over 30 per cent on average in the last 12 months, with many tenants relocating to more affordable areas in the city, according to a recent report by global property consulting firm CBRE.
“Rents were up 36 per cent in Dubai Sports City, 31 per cent in Silicon Oasis, and 33 per cent in the Trade Centre roundabout area on Shaikh Zayed Road,” said Mat Green, head of research in the UAE at CBRE.
Rental rates for the first half of this year have increased by almost 14 per cent, as per the report. Although prime areas have shown growth, major developments in secondary locations, such as Dubai Silicon Oasis, Dubailand, Jumeirah Village and Dubai Sports City have attracted high demand in the second quarter due to their lower costs, which has increased rents.
Also, villa rental rates have gone up for six consecutive quarters. Average rents increased by almost six per cent during the second quarter of this year, with two-bedroom units recording the highest growth rate at 36 per cent year-on-year, highlighted the report.
Residential rent hikes are expected to continue into the second half of this year, according to Green. “Rent rates will rise for another 10 per cent at least by the end of the year,” he warns.
He added that increase in rental rates is expected to continue until November when one of the nominated cities - one of which being Dubai - is picked to host the World Expo 2020.
“It has been a factor for the growth in the investment market. The decision will dictate sales and rentals over the next 12 months,” Green pointed out.
Echoing Green is Craig Plumb, head of research in Mena (Middle East and North Africa) for Jones Lang LaSalle (JLL). He, too, expects rents to increase in the second half of the year, albeit at a lower growth rate. “2012 saw rental growth in few selected locations, but in 2013, there is a lower rental growth across broader locations,” Plumb told Gulf News. Residential rates rose three per cent in the second quarter of this year, and 12 per cent year-on-year, according a report by JLL.
According to CBRE’s Green, rents were up 10 per cent in Jumeirah Village and six per cent in Downtown Dubai in the second quarter.
Meanwhile, according to an Asteco Property Management executive, the market is not expected to stabilize in the second half of the year. “We don’t expect the market to stabilise by the end of the year as improved economic conditions and market confidence fuel the housing market. As regional [and] international markets recover, the number of newcomers to Dubai slows down and more supply is delivered to the market, we’re likely to see some stabilisation,” Sean McCauley, director of agency services at Asteco, told Gulf News in an emailed statement.
Tenants, meanwhile, continue to look for more affordable areas in Dubai, while some have opted to buy property. “More and more occupiers are looking for affordability. Rents are going up across the board. More tenants are looking at the ownership market. For people that want to stay here for the next five years, it’s a good time to enter the housing market,” Green said.
Residential locations that have dominated the sales market, with transactions both in volume and sales, include Dubai Marina, Emirates Living, Palm Jumeirah and Downtown Dubai, according to CBRE’s report. Dubai Marina registered the largest number of dealings, with 3,748 transactions having reached over Dh6.6 billion.
Total real estate transactions in Dubai amounted Dh28.8 billion during the first half of this year, with Dh23.2 billion being transacted in cash, which is around 80 per cent of the total market, according to figures provided by Dubai Land Department.
Meanwhile, demand for office space in Dubai continued to see growth in the second quarter, driven by large corporations seeking new locations.
Some of the office locations that have seen rental growth include Jumeirah Lake Towers (JLT), Business Bay and Tecom at a six per cent increase during the second quarter.
Average secondary office rents have reached Dh1,050 per square metre per annum, as per the report. Total office stock has reached over 7.5 million square metres, with new supply being delivered in Business Bay and leasehold areas around Trade Centre 1 and 2.
Rents in prime areas are expected to grow in the second half of the year, according to the CBRE report.