Residential rents in International City were up by 76 per cent in fourth quarter 2013 compared same period in 2012, Asteco Property Management said.
In its fourth quarter 2013 report, the real estate consultancy said lease rates for one bed units in International City ranged between Dh40,000 and Dh45,000 per annum in Q4, while two-beds ranged between Dh60,000 and Dh70,000 pa. On a quarter-on-quarter basis, the hike was 34 per cent.
Jumeirah Lakes Towers (JLT) registered the second highest rise in the 12 month period, increasing 50 per cent in Q4 2013 compared to Q4 2012. One and two beds were leased in the last three months of 2013 for Dh70,000 and Dh95,000 pa and Dh95,000 and Dh125,000 pa, respectively.
Taking the third position on the rent surge list was Discovery Gardens, with the increase in past 12 months being 44 per cent. One beds rented for Dh65,000 and Dh75,000 pa, while two-beds were leased for Dh80,000 and Dh85,000 pa.
In the villa segment, Mirdiff saw a 40 per cent increase. Rents for three-bed units were between Dh100,000 and Dh175000 pa and four-bed units were Dh130,000 pa and Dh200,000 pa.
Arabian Ranches saw an 30 per cent increase in rents. Three- and four-bed villas were leased for Dh175,000 to Dh250,000 pa and Dh210,000 and Dh360,000 pa in Q4.
Jumeirah saw an increase of 28 per cent, taking the third place. Three- and four-bed units were leased for Dh155,000 to Dh235,000 pa and Dh175,000 and Dh300,000 pa.
Overall, on average leasing rates for apartments rose by 22 per cent in fourth quarter 2013 compared to third quarter 2013; and close to 50 per cent compared with the final quarter in 2012.
Villa rental rates, however, rose at a slower rate of six per cent in Q4 compared to Q3 2013; but went up by 20 per cent compared with the same period last year.
“Rental growth was driven by a steady influx of people to the city, partially due to the continued unrest in the region. Furthermore, Dubai winning Expo 2020 has led to additional requirements for staff accommodation in the food and beverage, leisure and construction industries as a number of companies see the potential of expanding their Middle East operations,” Asteco said.
“2014 will see a continuation of the trend witnessed in the previous year with sales prices increasing, albeit at a slower pace as approximately 25,000 residential units are forecasted for completion this year and further projects are expected to be launched,” the consultancy said.
Even Jones Lang LaSalle, a global real estate consultancy, has said that rents will increase but a slower pace than 2013.
In order to control the arbitrary rent increases, the Dubai government released a new rent decree in December 2013. The Decree, No. 43 of 2013 now sets a specific band on how the maximum rental increases that a landlord can demand at the time of renewing leases.
The decree is applicable to private and public sector owned properties in Dubai, as well as within the free zones.
Rent increase slabs
No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property in the same residential area
If the rent value is between 11 and 20 per cent less than the average rent of a similar property, the maximum rent increase shall be equal to 5 per cent of the rent value.
If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the maximum rent increase shall be equal to 10 per cent of the rental value
If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property, the maximum rent increase shall be equal to 15 per cent of the rental value
If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the maximum rent increase applicable is of 20 per cent
The average similar rental value of the property will be determined by the Real Estate Regulatory Agency's rent index, the decree states.