Dubai: When does a Dh1.65 million rental deal on a villa in Dubai represent a bargain of sorts? Answer: When comparable homes in the neighbourhood are asking rents closer to Dh2 million.
It was last month that a US citizen signed up for a six-bedroom Signature Villa on the Palm at Dh1.65 million, making it the costliest rental in Dubai during November. It could well be the biggest rental transaction for the whole year as well, with the Palm having earlier recorded one for Dh1.4 million.
These and other transactions completed recently for super-luxury homes on the Palm and at Dubai Hills and elsewhere at least confirm one detail – that at the top end of Dubai’s property market, demand and deals are still happening. It could improve further as Dubai and the UAE introduce more regulatory changes to attract entrepreneurs and those scouting for a destination to lead their post-retirement lives.
Less is helping
According to Riyaz Merchant, CEO of Realty Force, which brokered the Dh1.65 million rental, there aren’t that many readily available super-luxury properties in Dubai, even though all the talk in recent months have been about oversupply. That’s actually helping rentals and property values hold up at a time when the overall market has dropped by more than 20 per cent in the last two years.
“Everything is under construction or not being delivered right now,” said Merchant. “Dubai luxury rental space is currently in short supply, because you have many prominent businessmen and entrepreneurs from different parts of the world wanting to come to Dubai to make it their home - especially in a post-COVID 19 [scenario].
“We have realised there are not many communities that satisfy their needs. Anyone looking to rent or buy these kinds of homes want additional features way beyond just bricks and walls.
“They want a lifestyle either with greenery in front of their house or blue waters. In terms of seafront communities, you only have Palm Jumeirah and Jumeira Bay, which are nearly fully taken up at the moment.”
In broad agreement
Property sources catering to the premium end of the market concur with that view. It could be another six months at least before newly completed premium villas and mansions reach the completion line. And many of these homes would already have found buyers, leaving fewer options who want to make an entry now.
“That’s the reason why super-luxury in Dubai is still going for a decent mark-up, while within a 10-minute drive you will find mid-market homes that have dropped by 10 or 20 per cent,” said an estate agent. “Even more.
“Oversupply is not happening in all categories of Dubai’s residential market, and not definitely in super-luxury.”
A welcome return
Merchant talks about long pending investment decisions that are starting to see progress. “Bigger and chunkier investments” are starting to happen. “Earlier, their foothold used to be in places like North and South America and Europe, but currently they are viewing at Dubai as their destination of choice,” he added.
Options to buy too
Speculation is rife that Dubai – and the Palm – could see the deal close shortly for a Dh120 million 14,000 square feet property on the Palm. At the time when it was placed on the market, the ‘One100’ – as it is known – generated a lot of attention for the add-ons that came with the property.
An IMAX screen, five suites (including a 1,300 square feet master-bedroom) and private beach are all part of what comes with the Dh120 million tag. “If this and other “super-deals” keep happening in Dubai, it sets up the possibility of a return to form for the real estate sector,” said one industry source. “After two difficult years, the market could do with a change in fortunes.”