Dubai: Hopes of a cooling down in Dubai home rentals in the coming weeks seem misplaced.
In August alone, there were over 36,800 ‘Ejari’ contracts that landlords and tenants entered into within Dubai’s freehold areas alone. And that’s 9.7 per cent higher than the numbers from 12 months ago. (These are apartments and villas spread across Dubai’s freehold designated areas, and the total includes both rentals that are renewed as well as those being signed for the first time.)
For the January to end August phase, rental registrations in Dubai are up 11 per cent to more than 250,000 contracts, according to data from the portal DXBinteract.com. This is despite average rental increases in Dubai sticking to the plus 20 per cent range.
This is why market sources say that talk about rental growth starting to slow down or stabilise at current levels is premature. A two-bedroom apartment in Business Bay is pushing well past the Dh100,000 mark, and Dh150,000 and over in recently delivered towers. That’s after a 26 per cent increase in the 12 months ending August.
Head to Dubai Marina and a lease on a two-bedroom could cost Dh120,000 after an average gain of more than 30 per cent. Even mid-range communities such as Jumeirah Village Circle keep feeling the pull. A one-bedroom unit there would be around Dh45,000 on average, factoring in a 12.5 per cent gain.
“We don’t see a slowdown in Dubai rentals happening near-term – because there continues to be steady population growth,” said Firas Al Msaddi, CEO of fam Properties.
We reckon the resident base grew by about 30,000 in the last four months alone – and this was the summer period.
“A second reason is that mortgage rate increases are forcing more potential buyers to renew their rental contracts rather than purchase a home. The August numbers show a 13 per cent decline in mortgage-backed sales.” (Another round of rate increase will happen as early as late next week, with the US Fed poised to act to try and tame inflation. The money is on another 0.75 per cent hike, which will, given the dollar-dirham peg, immediately reflect in lending rates here.)
More homes delivered, but...
Dubai property market is in line for some sizeable delivery of new homes, with Dubai South, Al Furjan and MBR City leading the way. Would these be enough to slow down rental gains?
“Unlikely – because deliveries of new homes was consistently high in the first nine months of 2022 and there was no rental growth slowdown,” said a developer. “There aren’t that many new buildings getting delivered and with low occupancy. Occupancy levels would be at 60-80 per cent on average at most new buildings within three months.
“Dubai’s recording sizeable growth in new residents. Demand for Golden Visas linked to property investments is also only starting. And many of those newly acquired homes too would get added to the rental market.”
In other words, more reasons for rental increases?
Damac does things slightly more differently – with its latest launch of luxury five- to seven bedroom mansions, it has brought in two ‘names’. Call it a case of double branding.
For the exteriors of ‘Gems Estates’, the brand will be the Swiss jeweller de Grisogono, while the interiors will be kitted out by Roberto Cavalli. Both labels, incidentally, are owned by Damac’s founder Hussain Sajwani.
The villas at Damac Hills take their design inspiration from the Austrian ‘symbolist’ painter Gustav Klimt. This comes from ‘shapes and curves, reflected in the exterior of villas’. The colour theme is black diamonds and gold textures.
“Our branded associations over the years with the likes of Versace, Cavalli and others have all been highly sought after,” said Niall McLoughlin, Senior Vice-President.