Dubai: Any mention about a residential property rented out for Dh1 million or more in Dubai takes the mind immediately to the Palm. Having a private beach justifies all the additional zeros in the rental, you think.
But even outside of the Palm, Dubai’s super-luxury residential rental market seems to be doing quite OK, with a Polo Home at Arabian Ranches recently signing off on a lease for a flat Dh1 million.
The property had been on the market for some time and had an original rental demand for Dh1.2 million. But given how the market has been all through this year, settling for Dh1 million doesn’t seem much of a sacrifice for the landlord.
Average rentals at Arabian Ranches have been in the Dh140,000 and over range. And for comparison, an 18,000 square foot, seven bedroom Polo Home there is listed for sale at Dh27.5 million.
“In recent weeks, there’s been increased interest for super-luxury homes both for sales and rentals, with the Palm being the top choice,” said an estate agent. “But villas at Dubai Hills and District 1 in MBR (Mohammed Bin Rashid) City are picking up a lot of interest.” (Top-of-the range homes at District 1 are being listed in the Dh600,000 plus range, while those at Dubai Hills are at Dh150,000 and above.)
Selective buying, renting
At a time when COVID-19’s impact is still cratering demand and values in the wider property market, the super-premium category is showing quite a bit of resilience. (Even otherwise, in Abu Dhabi, Aldar put up the ‘Sold Out’ board in four hours on Sunday (November 22) for its “affordable” villas making up the Noya community on Yas Island. Prices started at Dh1.49 million. Clearly, selective buying – and renting – is still happening.)
Across the Dubai market, rents are now down by more than 10 per cent, and there is pressure for a further dip. Which is why, demand for super-luxury offers some respite.
Back to back deals
For Mark Richards, Head of Leasing and Property Management at Espace and the agency that brokered the Dh1 million rental for the Arabian Ranches villa, the pickup in interest at the top end of the market doesn’t come as a surprise. The company had earlier structured a Dh900,000 rental for a Palm home. (In October, another Palm home netted a record Dh1.4 million rental deal, this one structured by PH Real Estate.)
“The luxury rental market, which we consider properties over Dh500,000, has been busy for us,” said Richards. “We have seen demand for upgraded, unique properties maintain stable [rates] and even an increase for prestigious addresses.
“In key luxury communities like The Palm, there are more active tenants in the market than properties available. We have seen a shift in the market since the lockdown in UAE - people are valuing personal space more than ever.
“We have seen many lease agreements in the luxury market actually signed above the original asking price, due to substantial upgrades being carried out to the property as part of the deal.
“Some of these negotiations include new pools or extensions being added.”
The Dh900,000 rent was for a brand new villa on the Palm, on the tip of Frond G. “There are a few with listed rentals of Dh450,000 plus, but demand for luxury Palm homes is completely at odds with the situation elsewhere in the market,” said a broker. “They are not staying vacant for too long – and the difference between asking rental and the final one isn’t that significant.
“Expect more Dh1 million rentals – because fewer new super-sized villas are being built there.”
As usual, the dynamics in Dubai’s luxury property market are quite a cut above the rest.