Dubai residential rent rise slows
Dubai, July 23, 2008
The slowdown of residential rent increases in Dubai continued through the second quarter as well, according to a report.
The quarterly real estate report from Asteco, a leading property services company, said no significant residential rental increases were observed over the past three months. However, year-on-year average residential rents in Dubai climbed almost 22 per cent.
Sheikh Zayed Road continued to be one of the most coveted residential areas, recording the highest annual rental growth of 51 per cent. Bur Dubai and Ghusais areas followed closely with yearly rent increases of 42 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. Ghusais, on the other hand, has recently grown in popularity among families due to its fast development, less congestion and accessibility to the airport, Al Khail and Emirates Roads, the report said.
"Occupancy rates in Bur Dubai are extremely tight - between 90-95 per cent. Owing to its relatively affordable rents, most tenants tend not to move out resulting in a shortage of reasonably priced units and pushing rents up further. With availability coming only from new buildings, landlords are dictating higher prices to desperate home-seekers," said Andrew Chambers, managing director of Asteco.
Other areas such as The Greens, Satwa, Muraqqabat and Garhoud have seen around 10 to 15 per cent growth in rental rates over the second quarter of 2007. Very little movement was seen when comparing Q2 and Q1 2008 rental prices. Lowest prevailing rents continue at International City and Deira for studios and one-bedroom apartments, therefore popular among bachelors.
Downtown Burj Dubai, Sheikh Zayed Road, Jumeirah Beach Residence and Dubai Marina dominate with highest rents for studios, one and two-bedroom apartments. Rents range from Dh75,000-95,000 ($20,419-25,864) for studios, Dh100,000-180,000 for one-bedrooms and Dh140,000 to 220,000 for two-bedrooms respectively. The most expensive three-bedroom apartments are around the World Trade Centre area, commanding a whopping Dh410,000-590,000 in annual rents.
Rental rates for villas in Dubai, on the other hand, continue their upward climb, reporting an overall increase of 20 per cent compared to the previous quarter. "Increase in villa rents is the direct result of continuing undersupply of villas and townhouses compared to growing demand from UAE nationals and well-earning expatriates," added Chambers. "Several mega villas projects in Dubailand, Dubai Waterfront and Jumeirah Golf Estates will help ease this undersupply within the next two years."
Another key factor affecting development costs and consequently rents are rising land values. On an average, Dubai's land prices have grown by nearly 50 per cent to Dh400 per square foot since Q2 2007. Land values in Jumeirah Lake Towers have doubled due to limited number of plots and proximity to the Metro. Other areas such as Dubai Waterfront, Dubai Health Care City and Cultural Village have witnessed land value increases of 76, 55 and 53 per cent respectively.
"Demand is naturally high for plots currently on sale where construction can commence immediately. Waterfront developments are much sought after and command higher plot prices. Owing to the scarcity of such projects, prices at Dubai Waterfront could well overtake those at Business Bay," added Chambers.
Compiled and updated quarterly since 2006, Asteco’s research reports include the survey and compilation of residential and commercial rental analysis for each emirate of the UAE. Founded in Dubai in 1985, Asteco is the UAE’s largest property services company. - TradeArabia News Service