Dubai: New residents in Dubai are starting to find that locations such as Jumeirah Village Circle and Dubai Creek Harbour are no longer as affordable on rents as they might have thought. At JVC, across 2022, rents are higher by 10 per cent, which is despite new homes being delivered right through this period.
This means a two-bedroom apartment at JVC – until now one of the most accessible residential districts – comes with a rental upwards of Dh70,000 annually and well over Dh80,000 for brand new homes.
The same is happening at Dubai Creek Harbour, with the high-rise cluster finally seeing some heavy movements on the rent side. According to data from DXBInteract.com. the mid-to-upscale apartments there have gone through a 23.3 per cent rent increase in 2022, which means a two-bedroom is now at Dh150,000 plus for a year on average.
“These locations – along with MBR City - still provide a much lower entry point rent-wise for newcomers to Dubai,” said Firas Al Msaddi, CEO of fam Properties. “Because, elsewhere, they will be looking at a 29.2 per cent increase on the Palm Jumeirah, 27.8 per cent for Downtown Dubai, and 28 per cent in Dubai Marina.
“Another well-established location, CityWalk, has recorded a 19.4 per cent increase.” (As of now, two-beds at Dubai Marina show a wide rent band, from Dh150,000 and well over Dh200,000. Palm’s two-bedroom units hover around Dh200,000 and with the high prospect of further increases in Q1-2023. The Downtown Dubai too has listings around Dh250,000.)
With demand being such, there are fewer incentives from landlords. “There are still some rent-free periods being offered, or slightly lowered rent if the full amount is paid in full,” said an estate agent. “Plus, some giveaways on service charges, but that’s about it. The rental market in Dubai is red-hot.”
Best year by some distance
With every other month in 2022 coming up with another Dh100 million property sale or two, 2022 becomes the best-performing year ever in the history of the Dubai property market’, according to DXBInteract.com data.
Property sales were higher by 60 per cent to more than 97,000 transactions, and that meant the value ‘skyrocketed to Dh265 billion’, which is 76 per cent up on 2021. According to the property portal, this is attributed to three reasons:
• Influx of international investors, especially Russian;
• New regulations and transparency brought in by the Dubai Land Department.
• Golden Visa regulations to attract talent and investors.
Another well-established location, CityWalk, has recorded a 19.4 per cent increase.
Offplan zooms – and there will be more in 2023
All through last year, developers in Dubai launched nearly 49,000 new units as offplan, which is the highest total since 2008, with the bulk of the releases being at JVC, Damac Hills, Business Bay and MBR City. There were also steady additions at Dubai Marina and Town Square, while Dubai Hills Estate is the other investor magnet.
Handovers too hit a high
According to DXBInteract.com, almost 35,000 units were completed in 2022 which is the highest ever. (Or in the process of handover.) This was enough to touch a new handover high since 2012, with Damac, Emaar and Azizi taking the Top 3 spots in this.
Dubai’s still ‘fairly valued’
Offplan property values in 2022 have seen a 27.5 per cent increase across the board, says Al Msaddi. That means an apartment price average is Dh1.38 million, while that on a ready unit is Dh1.03 million after a 4 per cent spike.
“Dubai’s property market still offers ‘fair value’ for global investors compared to a New York or London, which remain ‘over-valued’, and Toronto, which is rated as a ‘bubble-risk’ by the Swiss bank UBS,” said Al Msaddi. “Going by numbers there, Dubai is still affordable.”
End-users must decide fast
Mortgage rates getting steeper along with property values – end-user buyers no longer have the luxury of waiting when to buy. Already, according to data, mortgage backed deals in Dubai were down by 3 per cent in 2022, no doubt brought by the successive US Fed increases and which were matched here as well.
Will the US Fed slow down the rate of increases this year? UAE property buyers with plans for a mortgage will be waiting to find out…