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28 March 2024

Dubai community rents up 80%; still 'affordable'

Published
By Parag Deulgaonkar

Rents of apartments in International City jumped by 80 per cent in the past one year, but the master community still remains far cheaper than rest of Dubai’s other freehold communities, according to a new report.

Lease rate for studio apartments in International City were 28 to 37 per cent lower than Discovery Gardens, and 57 to 62 per cent less than Jumeirah Village quarter-on-quarter (Q1 2014 vs. Q4 2013).

Similarly, one-bed units were 44 to 50 per cent cheaper than Discovery Gardens and Jumeirah Village during the same period, data released by Asteco, a property consultancy, reveals.

On an annual basis, rentals in Discovery Gardens and Jumeirah Village rose by only 41 per cent and 39 per cent, respectively, compared to International City.

“International City is and remains an affordable community,” John Stevens, Managing Director, Asteco, told Emirates 24|7, as he cites three reasons for the annual increase.

“The affordability of the area was the main driver, as tenants who were priced out of other areas moved to International City. Secondly, we noticed a trend, earlier during 2013, that Sharjah residents moved to the community, mainly to offset the cost of Salik.

“Today, in many cases individuals require a tenancy contract in their name to avail certain government services (such as sponsoring family). To fulfill this requirement, they moved away from shared accommodation to small units within International City. All these factors led to the rapid rental growth over the year.”

In fact, Asteco says average rents for a studio, one- and two-bed in International City in the first quarter 2013 stood at Dh20,000 per annum (pa), Dh26,000 pa and Dh40,000 pa, respectively. But in the first quarter 2014, studios range between Dh35,000 and Dh45,000 pa, one beds between Dh45,000 and Dh50,000 pa and two beds between Dh65,000 and Dh75,000 pa.

Though Stevens expects some more moderate increases in rents, he believes that the main driver for International City is affordability and any further rent increases are likely to be “unsustainable” for the target market.

“Therefore, we believe that rents have overall peaked so there will only be limited growth in the area over the coming month,” he adds.
International City, spread over an area of 800 hectares (8 million square metres), is composed of 485 buildings and comprises residential districts of Central Business District, Persia, Greece, Spain, Morocco, England, France, Italy, Russia, China and Emirates.

Asteco’s Q1 2014 report puts the lease rates as follows:

International City
Studio: Dh35,000 to Dh45,000 pa
One bed: Dh45,000 to Dh50,000 pa
Two beds: Dh65,000 to Dh75,000 pa

Discovery Gardens
Studio: Dh45,000 to Dh55,000 pa
One bed: Dh65,000 to 75,000 pa
Two bed: Dh80,000 to Dh90,000 pa

Jumeirah Village
Studio: are 55,000 to 65,000 pa
One bed: 65,000 to 75,000 pa
Two bed: 85,000 to 105,000 pa
 

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