Dubai: The sharpest gains in residential rentals are happening in secondary — and as a consequence the more affordable — locations of Dubai, according to a new report from the realty firm Jones Lang LaSalle. Therein lies the risk that rental increases are happening at a rate that would cut deep into the pockets of mid-income households.
Across the board, rental values in Dubai’s residential space last year were up 18 per cent, according to the report. For tenants looking for a respite, the report reckons that increases this year may not necessarily at the same rates.
“As such, rental values have increased the most on a yearly basis in areas such as Sports City, International City and JLT while the percentage growth was lower in prime locations such as Dubai Marina or the Palm Jumeirah,” according to the report.
“Success in securing Expo 2020 has further boosted sentiment that is causing rents and prices to increase at unsustainable levels. The rapid price growth, return of speculation and the dominance of cash buyers could translate into excessive price growth or over development that, if not managed carefully, could result in a bubble that would be harmful to the Dubai residential sector in the longer term.”
When it comes to residential stock, the number of new and completed units is expected to total 28,000 units this year. But the reality could be somewhat lower than that, Jones Lang LaSalle estimates.
Last year, 9,600 units were delivered, which is 26 per cent lower than those in 2012. What it also means is that the bulk of the projects that were delayed during the crisis years are either completed or nearing that status.
“Dubailand accounts for almost 33 per cent of the announced future supply, with around 16,000 residential units expected before the end of 2016,” the report noted. “Other areas that should see major residential completions are Dubai Marina (4,200 units); Dubai Sports City (3,700 units); IMPZ (3,000 units); Business Bay (2,700 units) and Dubai Silicon Oasis (2,600 units).”
