Dubai house rents rose 50% in 2007

Dubai: Average rents of residential apartments in Dubai increased nearly 50 per cent in the past year and rent increases in the northern emirates are to follow, according to a latest industry report.

Great Properties yesterday released the Great Report, their first real estate report covering the UAE, in cooperation with impaQta Management and Advisory company.

The report quotes figures released by Dubai property management company, Asteco, that show the average rent for a one-bedroom apartment increased 14 per cent over the last year; rent for a two-bedroom apartment increased 18 per cent and rent for a three-bedroom increased 13 per cent.

Bilal Kanbar, management consultant for impaQta in Riyadh, said the increase can be attributed to international inflation and increasing prices of building materials.

Construction costs

"Cement and steel prices went up heavily. This is an international trend and it will have its effect on real estate prices, along with inflation and increasing demand," Kanbar said.

He added, "We don't see rents coming down, but they will mature - they'll stop increasing at this fast rate. So. it will much easier to find apartments and at prices that are more relevant to international benchmarks."

The northern emirates, including Ras Al Khaimah, Umm Al Quwain and Ajman have been absorbing the overflowing demand from Dubai, offering lower prices to Dubai's overstretched tenants.

The report shows that while rent for a two-bedroom apartment in Dubai can be around Dh119,000, the same apartment is around Dh37,500 in Ras Al Khaimah, Dh35,500 in Umm Al Quwain and Dh38,600 in Ajman.

However, the report depressingly suggests that rents even in these emirates are also set to increase as they develop. Ajman alone has around $7 billion worth of projects under development.

Rents for two-bedroom apartments in Ras Al Khaimah, Umm Al Quwain and Ajman are predicted to skyrocket to nearly Dh60,000 by 2010. The same two-bedroom apartment in Dubai could reach a heart-attack inducing Dh140,000 by 2010.

Competitive prices

The report shows that rents in the northern emirates increased around 20 per cent last year, with a five per cent increase in the last quarter of 2007.

Kandar said now is the time to take advantage of the competitive prices in the northern emirates.

"We still have the advantage of stretching the opportunities in these emirates. Today, prices in these emirates are still low and there are plots in prime areas. Therefore they are a goldmine for investors and developers," Kandar said.

Kandar said that in five years, Saudi Arabia will have become a major contender for the real estate hotspot in the GCC.

"In five years you'll see a lot of big projects similar to the UAE. The introduction of economic cities in Saudi Arabia is done by finding geographic real estate. You have economic cities in Riyadh, other cities and in the eastern area. This will diversify the areas of real estate," Kandar said.

UAE: Average rents

Average rents in 2010

Dubai rents in 2007

Rental rates in northern emirates increased 20 per cent since 2007.