Renewed confidence in the economy and the real estate sector is pushing rents up further in some areas in Dubai during the first quarter of the year.
A report released by Asteco yesterday revealed that rents for apartments and villas in Dubai increased by 3 per cent and 4 per cent respectively during the period January to March this year when compared to the last quarter of 2012. Over the past 12 months, average rent increases stood at 19 per cent for apartments and 21 per cent for villas.
Significant rent jumps were noted in International City, where a two-bedroom unit increased by 8 per cent to Dh40,000, while most other areas recorded increases of around 3 per cent.
Cluttons, a real estate specialist in the UAE, noted the same trend, citing that upward movements have been driven by renewed economic confidence. “There has been a healthy rise in rents recorded at the lower end of the apartment market, as rising rental values drive tenants to lower budgetary options,” said Richard Paul, head of residential valuations, UAE, at Cluttons.
Commercial spaces are also costing tenants dearly this year. At Dubai Investments Park, Asteco said rents rose by 13 per cent to 485 per square metre, while Jumeirah Lakes Towers and Tecom increased by 20 per cent and 25 per cent respectively to Dh654 and Dh800 per square metre.
“Prices are not only being driven by tenants relocating, Dubai is also attracting new tenants and those expatriates here are still tending to take a longer-term view of living in Dubai,” said John Stevens, managing director at Asteco Property Management.
However, Robert Kerr, senior consultant for residential leasing and sales at Better Homes, disputed claims that the rent increase is across the board. He said there has been an increase in rent in general but it’s only for “high-end and very desirable properties”.
“In fact, we are sitting with very high vacancy lists of mid-range and smaller properties,” Kerr pointed out.
“Landlords are having to take cuts on rents to get tenants prior to the summer exodus and on the other hand, some landlords have got wind of rents increasing and they are trying to get existing tenants out of their properties because they think they can get a few extra thousand dirhams, but in the end, they are left with an empty property,” he added.
As rents go up, so do sale prices for apartments and villas in Dubai. Asteco said apartment sale prices grew on average by 12 per cent, while those for villas climbed by 5 per cent.
“The overall outlook is positive with demand and rates expected to continue to grow. However, this will also mean that some tenants and buyers will be priced out of certain buildings or communities,” said Stevens.
Discovery Gardens apparently led the price increases, with units in the area commanding a sale price of Dh6,450 per square metre, up 33 per cent from the previous quarter. In Dubai Marina and Jumeirah Beach Residence, rates expanded by 14 per cent and 15 per cent respectively to Dh12,900 and Dh12,400 per square metre.
Prices for villas in the Meadows jumped by 10 per cent to Dh11,850 per square metre. In Jumeirah Islands, prices for units rose by 9 per cent to Dh13,450 per square metre and in Jumeirah Village, rates grew by 9 per cent to Dh6,450 per square metre.
