Rents in mid and high-end areas in Dubai are on the rise due to limited inventory, higher demand from high net worth individuals (HNWIs) and residents’ preference for larger spaces.
Though most of the rise has been witnessed in the villa segment, high-end apartment areas have also seen rents going north. Industry executives estimate that this upward trend is expected to continue in the near future.
“We have seen rental rises for new-lets in the range of 3 to 15 per cent year-on-year, particularly for prime apartments and villa properties in established villa districts such as the Palm Jumeirah, Emirates Hills, The Springs, The Meadows, The Lakes and The Arabian Ranches and apartments in City Walk, Downtown, Dubai Marina and Palm Jumeirah,” says Edward Macura, partner at real estate consultancy CORE.
“Dubai is a safe and open business destination, 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,” he said.
Real estate consultancy Asteco’s second-quarter data showed that apartments in Greens, Business Bay and Dubai Marina recorded the highest increase in rentals in the second quarter. For villas, Arabian Ranches, Dubai Hills Estate, Mirdif, Meadows and Palm Jumeirah witnessed a good spike of over 10 per cent in rentals year-on-year in the last quarter.
Reflecting the market trend and strong appetite for the top-notch properties in Dubai, a Palm Jumeirah villa was rented for a whopping Dh3.8 million in the first week of August 2021, setting a new record in the local market.
While Expo 2020 is expected to boost market sentiment, Macura stated that a range of factors is also collectively impacting the rental market recovery, such as the UAE’s demonstrated resilience in effectively managing the pandemic and successful vaccine rollouts.
Ayman Youssef, vice-president at Coldwell Banker, UAE, says all villa communities, especially the luxury segment, have seen a reasonable rise in rents.
According to Coldwell Banker rents in Palm Jumeirah increased 10 per cent, 12 per cent in District One, over 32 per cent in Sidra, 2.5 per cent in Downtown, 11.6 per cent in Mira, over 4 per cent in Springs and 3.45 per cent in Dubai South over the last 12 months.
“People are looking for and shifting to better quality properties with more amenities and bigger space. Post the lock-down and increased work-from-home situation, people realised the value of having bigger homes with gardens, gated communities, amenities such as swimming pools and play areas. With the businesses gradually picking up and sentiments improving, more and more people are now trying to upgrade their living space,” added Youssef.
Where will rents continue to rise
Coldwell Banker vice-president noted that villas and townhouses – especially Arabella, Mira, Sidra and Maple – will continue seeing a rise in rent prices. “Dubai South is also expected to grow with the onset of the Expo 2020 and the subsequent demand in housing commercial spaces that it will generate.“
Edward Macura of CORE said villas in Palm Jumeirah, Emirates Hills, The Springs, The Meadows, The Lakes and The Arabian Ranches and apartments in City Walk, Downtown Dubai, Dubai Marina and Palm Jumeirah will continue witnessing rental resilience over the next 6 to 12 months.
Macura noted that the Dubai residential market performance is becoming increasingly segmented, with the prime residential districts witnessing steady rental rises since early 2021 due to limited available inventory in key districts, higher demand from HNWIs and flight to quality with the preference for superior built and larger and more open spaces.
“It is important to note that price recovery is not uniform across the market with most of the low to mid-range and secondary area stock continuing to see rental contractions and absorption challenges – albeit the rate of rental declines is starting to decelerate. With supply projections for this year and next year remaining high, we expect rents to remain under pressure in secondary areas,” he added.
Source: CORE, Coldwell Banker, Asteco, KT Research