Dubai witnesses rent growth in select areas

Marginal rent growth has been seen in select areas such as Al Qusais, Arabian Ranches, International Media Production Zone (IMPZ) and Al Barsha, while other areas still have continued to register fall, said a new report.

"Rent declines are largely due to a combination of increasing supply and weak demand for specific areas or developments," said Jesse Downs, Director of Research and Advisory Services, in a July leasing guide.

However, while relocations show definite trends, rent levels do not. The uneven movement of rents across Dubai points to continued volatility, as the market continues the process of price correction and discovery. Downs said: "Isolated rental adjustments are symptomatic of specific and transient patterns that are likely to stabilise in the short- to medium-term. Observers must remember current price movements are not necessarily indicative of broader market trends. It is still too early to call a price floor."

The relocation trends observed since first quarter are still prominent, which has translated into new discernable demand characteristics.

"Some relocation patterns lead to increased aggregate demand. New leasing demand is coming from people leaving shared accommodations in favour of acquiring their own units," said Downs.

In addition, relocations continue from Sharjah and Abu Dhabi. When moving to Dubai, Abu Dhabi residents are motivated primarily by location, whereas demand originating from Sharjah centres on price. Al Qusais is a notable exception to the price-driven demand from Sharjah. Due to its close proximity, Al Qusais has attracted many former residents, causing lower-limit rents to rise by Dh10,000 to Dh15,000 for all unit types.

Arabian Ranches is an example of area-specific rent changes that do not reflect the whole market. Rents for two-bedroom villas in Arabian Ranches fell between Dh10,000 (upper limit) and Dh20,000 (lower limit) last month, while rents for larger units increased. Three-bedroom villa rents (lower limit), for example, rose by Dh10,000, and five-bedroom villa rents (lower limit) jumped by up to Dh50,000. Trends in this area show a demand shift from smaller to larger units, also applies to the Greens.

Upper limit rents for studios and one-bedrooms increased in areas such as IMPZ and the Views, while upper-limit rents for five- and six- bedroom villas in Al Barsha have fallen sharply to Dh60,000 and Dh90,000.

In Jumeirah Beach Residence, rents increased across the board. For studios and three-bedroom units, the rents grew by Dh10,000 (upper and lower limit together) and Dh30,000 to Dh45,000, respectively.

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