Property | UAE

Dubai rents rise 17% in past 12 months

Growing population and limited supply in the best areas cause leap in charges for tenants

  • By Deena Kamel Yousef, Staff Reporter
  • Published: 00:19 December 10, 2012
  • Gulf News

  • Image Credit: Francois Nel /Gulf News
  • About 36,000 new apartments and villas may enter the market during 2013 to 2015 if construction delays are minimal.

Dubai: Residential rents in Dubai increased by 17 per cent on average over the past 12 months due to a growing population and a limited supply in the most popular locations, according to a new report by real estate consultancy CBRE.

“For tenants, this is a warning flag. We don’t want to see the market overheat as done previously,” said Matthew Green, CBRE’s head of research, at a media roundtable yesterday.

About 36,000 new apartments and villas may enter the market during 2013 to 2015 if construction delays are minimal, the report showed. Most of the upcoming residential supply is expected from secondary locations like Dubailand with 26 per cent of it in Motor City, Dubai Sports City, Liwan and Dubailand Residences.

“With supply levels becoming increasingly tight in popular community areas, further product launches are anticipated in 2013,” Green said.

Residential sales rates rose 13 per cent in the most established locations over the last 12 months with less than 20 per cent funded by mortgages and the rest in cash transactions, he said.

A total of 14,000 residential sales transactions were recorded in 2012, compared to 11,000 units the year before, he said, citing data from the Dubai Land Department.

“There is some concern about speculation in the market, not like 2008, but we keep an eye on it,” he said. 
Retail and hospitality
The overall retail supply in Dubai will increase to 2.45 million square metres by the end of 2015 from 2.2 million square metres when about 230,000 square metres of new retail space will be completed in the next three years, the report showed.

Currently, Dubai has 57 per cent of the UAE’s total retail stock of 3.85 million square metres, it stated.

Prime rental rates for new leases are now around Dh4,500 per square metre. Mall rentals are slowly rising and the major malls have an occupancy rate above 90 per cent. Mall of Emirates and Deira City Centre are the best occupied malls at this time.

In the hospitality sector, about 14,000 hotel rooms in three to five-star categories will be complete in the next thee years if construction delays are minimal, the report showed. Five-star hotels will comprise 70 per cent of the pipeline until 2015.

Office market

In the office market, there is an overall vacancy of 47 per cent but that does not reflect demand for commercial district areas like Shaikh Zayed Road that has 17 per cent occupancy, the report stated.

Comments (8)

  1. Added 15:37 December 10, 2012

    what extra benefits people get when price of food rises? everyone should see increase in rent as a demand supply issue and not equate it with extra benefits.

    ghulam, toronto, Canada

  2. Added 14:33 December 10, 2012

    100% agreed with Karim and with the message added at 12.36 December 10,2012. Only rents will be demanded, but no change in facilities. Salaries remain the same for years and the years to come ahead with the reason of global economic crisis and less profit.

    ANONYMOUS, DUBAI, United Arab Emirates

  3. Added 14:22 December 10, 2012

    Dubai would be heaven without the real estate guys. they sucked our money in the past and left us with no savings due to high peak rents in 2006- 2007+

    mai, dubai, United Arab Emirates

  4. Added 13:59 December 10, 2012

    It looks like a repeat of the 2008 phenomenon. There is no reason for the rents to rise at the rate they are going. The middle and lower income people have to suffer. They have to either pay more from their pockets or have to move to lesser rental areas. I hope landlords and real estate companies are more realistic this time around.

    Afsa, Dubai, United Arab Emirates

  5. Added 12:36 December 10, 2012

    what is the point then? rental rate goes up, people run away where they find better place for living, of course better rental rate, then real estates suffer from no business until they drop the prices down and request tenets to come back and rent with extra services and facilities. I do not believe it is the customer demand all the time, but it is searching for extra profits for no developing plans or enhancements on the current states. People still suffer from not enough parking lots, very small apartment area, no extra services against the high amount of money paid. Is this what is called business or services business? What kind of tenant who accept in some places or some apartment with not at least environmental conditions available? and I think people need to pay more attention to their spent money and ask what are you giving me extra?

    Russel, Dubai, United States

  6. Added 12:30 December 10, 2012

    I also agree with Karim.

    ali, dubai, United Arab Emirates

  7. Added 11:13 December 10, 2012

    what extra benefits do we get with the yearly increase of rents that goes up? its not justified. our salary never increases, it's the same for years. does any landlord care about it? we are suffering, who will care about our plight?

    karim, dubai, United Arab Emirates

  8. Added 10:23 December 10, 2012

    there is a law right? what happened with the 5% cap? and why tenants are not reporting the landlords?

    Maliha, Dubai, United Arab Emirates

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