Property owners in leasehold areas of Dubai have something to cheer about.
Occupancies have remained high and rentals have going up steadily.
According to Asteco, a Dubai-based real estate agency, average apartment rents in Bur Dubai have risen marginally by three to seven per cent, while rents in Karama have stablised since beginning of the year to date.
Data provided by the agency reveals average rentals for one-bed apartment in Bur Dubai jumped by seven per cent to Dh45,000 per annum (pa) in the third quarter compared to Dh42000 pa in the first quarter. Rents for two bedroom units rose to Dh70,000 pa from Dh68,000 pa, while three beds units were currently available for Dh90,000 pa compared to Dh85,000 pa.
In Karama, average rents for two bedroom apartments rose by five per cent to Dh58000 pa from Dh55,000 pa, while one and three-bed remained stable at Dh40000 pa and Dh75000 pa, respectively.
The agency stated that rentals will vary from building to building keeping in view its built quality, age and facilities.
Vineet Kumar, Head of Business Development, Asteco Dubai, told 'Emirates24|7':
“The rents in these locations are stable. There is a high demand to live in these locations as infrastructure is well developed and connectivity to the metro has become a main attribute.”
He added: “With the new inventory now coming online in these areas it will be interesting to see what, if any, effects this new supply has on existing rates.”
Laura Adams, Sales and Leasing Manager, SPF Realty, said: “Some buildings have seen an increase due to high demand and most of the people in the area are renewing their leases. New buildings too have handed over in the past year, which has seen rents increase. But this is due to the facilities that these buildings have to offer.”
She noted there is not much tenant migration happening from leasehold to freehold areas.
“These areas are specifically in demand from the Asian community, who wish to stay in these area but may be only wish to change buildings. The people changing to new freehold areas are more likely to come from Dubailand.”
Charles Neil, Chief Executive Officer, Landmark Properties, said: “Bur Dubai and Karama remain popular for certain established expatriate communities and for reasons of proximity to their work place for instance. But there is a shift to the freehold areas near Sheikh Zayed Road because there is more choice, facilities are better and for people working in Abu Dhabi these areas are more popular.”
Rental levels have fallen by at least 50 to 60 per cent in these freehold areas since 2008, he said, adding, “The freehold owners constitute a new breed of landlord and are more flexible than the traditional landlords and therefore people moving to the new freehold areas have been able to get better deals.”
Kumar from Asteco believes many tenants living in rented properties are owners of units in freehold areas as well.
“There is a trend whereby the infrastructure in these new areas has improved to such an extent that it is now encouraging landlords to become owner-occupiers,” he added.