Prime Dubai rents half of London, New York

Prime rents in Dubai rose by 13.6 per cent in 2013, the second fastest in the world, but lease rate are still 50 per cent below those found in London and New York, a new report reveals.

“Prime rents in Dubai ended the year almost 14 per cent higher, down from an annual rate of growth of 16 per cent last quarter,” Kate Everett-Allen, International Residential Research, Knight Frank, said in the Q4 prime global rent index report.

“A two-tier market emerged in the second half of 2013 with secondary locations recording a stronger rate of growth than those in the emirate’s prime developments.”

She added that events in Syria and Egypt emphasised Dubai’s status as a regional “safe haven” as well tenant demand rose following the announcement that the city will host Expo 2020.

JLL, a real estate consultancy, said in February that rents rose 17 per cent in 2013, but doesn’t expect the same rate of growth this year.

Dubai has introduced a new rent cap that has limited rent increases for existing tenants between five and 20 per cent. New leases aren't government by the cap.
 

The prime global rental index, which measures the performance of prime residential rents across 17 cities worldwide, saw an increase of 4.8 per cent in 2013.

Nairobi recorded the strongest rate of growth in annual terms with prime rents rising by 25.9 per cent in 2013 as multinationals looked to strengthen their headcount in the Kenyan capital.

“Although prime rents in Nairobi and Dubai recorded the strongest rate of annual growth in 2013, rents here are half, or in Nairobi’s case, as much as 70 per cent below those found in London and New York. “

In its Wealth Report 2013, Knight Frank said Dubai’s prime luxury properties were over 10 times lower than Monaco, the world’s most expensive residential property market.

According to the prime rent index, Hong Kong saw rental growth slowing due to the reduction in housing allowances and fewer expat arrivals. Besides, tenants found landlords more willing to negotiate on rents than before, the report said.

A comparison of prime rental growth since the start of the financial crisis in 2008 (Lehman’s collapse) shows that despite London’s recent weak performance it has outperformed the many cities, rising by 20.9 per cent in 2013.

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