Dubai: Can you name the Top 2 best-performing residential locations in the city in terms of rental gains so far this year?
The Palm Jumeirah is an obvious choice, but if any of you brought up Dubai South as well, then full marks to you.
That’s right, Dubai South has this year been not just hitting the charts, but has emerged at the top spot in terms of rental increases during the year. These are based on the ‘Ejari’ contracts that are signed or have been renewed at the Dubai Land Department, according to a new report from GCP-Reidin.
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“Dubai South was nowhere in the Top 5 or 10 rankings in the last two years, but with a 40 per cent rental increase (based on the ejari contracts), it has pipped the Palm, where rents grew 20.9 per cent,” says the report. “Clearly, Dubai South emerged as a favoured spot for those seeking mid-market housing – and now, rents are gaining because there’s so much pent up demand.”
What are the rents now?
Listing for two-bedroom apartments at Dubai South show a broad range, from Dh55,000 and going past Dh80,000 if the landlord has provided much of the furnishing and fitouts as well. At the Expo Village, the asking rents tend to be higher, and these units also tend to offer more space.
Now, if the prospective tenant’s choice is for a 1-bedroom unit at Dubai South, the range comes to Dh40,000-Dh55,000 based on the listings.
In fact, broker sources say the number of listings at the ‘city-inside-a-city’ have seen a significant drop since April/May. And that by October, most apartment buildings there would show limited availability.
The same is true for Dubai’s other mid-market communities, with Motor City, Remraam, Green Community at DIP, Dubai Production City all figuring in the Top 10, based on the ejari contracts. Jumeirah Village Circle is there too.
Among the luxury/upscale residential destinations, Sobha Hartland makes a break into the Top 10, while the Palm and Dubai Hills Estate remain the top choices.
“Dubai Hills Estate and Meydan City are another two newer communities that have shown significant growth this year,” says the GCP-Reidin report. “Along with Dubai South and Sobha Hartland, they make up a quartet that prove that newer communities can compete with their older and more established peers, beating out Business Bay and Jumeirah Beach Residence to make the list of top performers.”
Will rents stabilise/cool?
Market sources say while price gains on property are showing signs of stabilising in Dubai – though selectively – the upward pressure on rents will not abate any time soon. They point to the job market, which continues to run strong, demand for offices, which is on the recovery path. The Dubai Chamber’s half-year data shows more new companies making an entry, and that too is a trend with long legs.
How’s the rental split?
All of which play out in the rental market, where according to the GCP-Reidin data, ‘Studios and four-bedrooms have seen greater (rental) growth in newer communities, but in the 1-, 2- and 3-bedroom apartments - which account for 82.45 per cent of all apartment transactions this year - the older communities have seen slightly more (price) appreciation’.