Tenants are also finding it difficult to get a villa in some high-end communities with a limited supply
With the Expo 2020 Dubai less than a month away, the demand for some high-end buildings in popular communities of Dubai has reached a peak. Many of these properties have already been fully occupied.
Real estate industry executives told Khaleej Times that several buildings are either fully occupied or almost fully occupied due to good rental rates and better management of the facilities.
In addition, tenants are also finding it difficult to get a villa in some high-end communities with a limited supply.
Manal Fraiwat, executive director for property management at Asteco, said several high-end buildings in popular communities are fully or almost fully occupied, driven by competitive rental rates and incentives, high-quality specifications, good maintenance, and proactive property management among others. “Increasing demand for villa rentals has caused demand for apartments to soften. There has also been interest from tenants looking to upgrade or upsize their properties,” said Fraiwat.
Asteco’s second-quarter 2021 report revealed that the vast majority of communities recorded rental rate growth, resulting in an average increase of three per cent and eight per cent for apartments and villas, respectively. Average apartment rental rates remained in contraction at three per cent compared with the same period last year and villa rental rates grew by 10 per cent.
Prathyusha Gurrapu, head of research and advisory at real estate consultancy Core, said as seen over the last quarters, demand for prime apartments in select districts has steadily increased, particularly in Palm Jumeirah, City Walk, few high-end projects in Dubai Marina and Downtown Dubai.
“With limited supply in this niche segment, a few buildings may see limited stock. However, most of the mainstream and affordable apartment market continues to be over-supplied with rents and occupancies under pressure. This trend further reinforces the increasing segmentation in the residential market. While the instance of rental rises and low vacancy levels are being witnessed and widely talked about, it is limited to a section of the prime market and is not a city-wide phenomenon,” pointed out Gurrapu.
Tenants still shifting apartments
While Expo 2020 is expected to boost market sentiment, a range of other factors is collectively impacting the rental market recovery.
“The UAE’s demonstrated resilience in effectively managing the pandemic. The highest rate of vaccine rollouts and receding number of cases are further positioning Dubai as a safe and open business destination along with a strong domestic focus on job creation and fiscal incentives. We foresee this rental resilience, or higher absorption at existing rents for prime properties in Dubai to continue over the near term,” added Gurrapu.
While there was a spike in demand for rentals following the movement restrictions brought on by the pandemic and the new work-from-home culture, Fraiwat said this has now eased as most of the available properties have been absorbed.
“Residents looking to upgrade (or downgrade) in terms of size, quality and location continue to exist. Moreover, as the economy and job market continues to recover, more newcomers will arrive in Dubai and stimulate demand,” added Fraiwat.