Rents in Dubai have shown a flatter growth rate in the first quarter of 2008 compared to the last quarter of 2007, a Dubai-based property services company has claimed.
The Quarterly Residential Report by Asteco found that rents have registered a slower increase as availability of residential units has risen.
Asteco’s Managing Director Andrew Chambers said: “There are several reasons for this slowdown, including the recent availability of housing units, especially with the delivery of International City and the handover of several towers at Jumeirah Lake Towers and Downtown Burj Dubai. Needless to mention, the reduction of the rent cap from seven to five per cent has certainly had a desirable impact as well.”
According to Asteco, the Palm Jumeirah and Old Town Burj Dubai areas command the highest annual rents, with studio and one-bedroom at Dh100,000 and Dh140,000, respectively.
At the other extreme, the lowest rents can be found at International City with studios from Dh42,000 and one-bedroom units available at about Dh58,000. When comparing year-on-year rental changes in Dubai, the highest increases were reported at the Greens for studios, the company said, where average annual rents increased from Dh65,000 to Dh85,000, a 31 per cent increase. Two-bedroom units at International City witnessed a 36 per cent increase in rents, from Dh70,000 to Dh95,000, when compared to the same period last year.
“The rental increase seen at International City is mainly due to relatively fewer two-bedroom apartments available,” said Chambers.
Other areas that saw year-on-year rental increases include Old Town Burj Dubai, which reported a 17 per cent increase for one-bedroom units and a 21 per cent increase for its two-bedroom apartments.
Annual rentals increased by Dh20,000 and Dh30,000 respectively over 2007 rental rates.
Rental rates for villas, which are determined based on location, size and condition, saw Mirdiff commanding the lowest rates, while Jumeirah commanded the highest asking rate due to its close proximity to the beach and Sheikh Zayed Road.
The report said the average annual rent for a four-bedroom villa in Mirdiff was Dh175,000 while a similar property in Arabian Ranches and Jumeirah would rent at more than Dh300,000. According to Asteco, no substantial increases in rents were observed compared to the past quarter.
“Demand and supply determine the value of a property and as a result its rent. Rents in Dubai could not continue to soar,” said Chambers. “Prices will still increase but not at the phenomenal rate we have seen over the past three years.”
Dubai rents register ‘slowdown’