Prime residential rents in Dubai rose one per cent in the first quarter 2012, according to a new report.
As per Knight Frank’s prime global rental index, rents in the emirate declined 3.9 per cent from March 2011 to March 2012, with decline slowing down from the year 2010-2011.
In its first quarter report, Asteco, a Dubai-based real estate consultancy, said overall rental rates for apartments and villas had risen one per cent on average. Downtown Dubai rents rose five per cent, followed by Jumeirah Beach Residence at four per cent and Jumeirah Lakes Towers at three per cent. Rents in Meadows and Green community climbed by three per cent, respectively, while Arabian Ranches reported a two per cent jump, the agency had said.
Although Global Investment House in a report agreed that rents have started to increase in selective areas of Dubai after the pace of rental income slowed down significantly in 2011, it said Dubai market is currently 20 per cent oversupplied that means 67,000 units are currently vacant.
As per the index, rents in Manama, Bahrain, performed the worst, recording the biggest decline in prices among 16 key cities surveyed. The fall was a huge 20 per cent in the year to March 2012, while the decline for first quarter was 16.7 per cent.
Nairobi was the strongest performer on an annual basis, gaining 14 per cent and Moscow was the strongest on a quarterly basis, up six per cent. Europe, despite the tumultuous economic conditions, saw prime residential rents rise on average by 2.2 per cent in the year to March 2012.
Prime residential rents rose by 0.4 per cent in the first quarter, nit the index rose by 1.7 per cent in the 12 months to March 2012.
The index is billed as the definitive means for investors and developers to monitor and compare the performance of prime rental markets across key global cities and is aimed to establish the effect the global economic downturn had on corporate market activity.
The global consultancy, citing letting agents, in its corporate lettings survey, said the global downturn saw prime rental markets benefit from rapidly-weakening sales markets. However, as rental demand strengthened this was counterbalanced by new stock entering the market as would-be vendors became forced landlords. Competition for tenants pushed rents lower and void rates higher.
According to respondents, the demand from the corporate sector softened in 2008/09 as businesses worldwide took stock of economic events and re-evaluated strategies and budgets. This was evident as much as in the old world cities of Europe and the US as in the new emerging markets of Asia and the Middle East.
However, letting agents are upbeat about the direction of their prime rental markets. Eight of the 11 cities surveyed are expected to see prime rents remain the same or rise in the remainder of 2012 with majority of the respondents expecting that activity would increase in the coming two to three years.
The cities surveyed were: Shanghai, Beijing, Mumbai, New York, Geneva, Paris, Singapore, London, Hong Kong, Tokyo and Bahrain.