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22 February 2024

Dubai rent hikes: Discovery Gardens, Downtown put tenants under pressure

By Parag Deulgaonkar

For apartment owners in Discovery Gardens, 2012 saw a reversal of fortunes as rents, which fell steeply in 2010 and 2011, rose sharply during the year with rental hikes in the affordable living community being at par with apartments in Downtown Dubai last year.

According to  Asteco Property Management’s second half 2012 Dubai report, rents for one- and two-bed apartment in Discovery Gardens jumped 23 per cent on averge year-on-year. One beds are being leased for Dh45,000 per annum (pa), while two-bed are rented for Dh70,000 pa.

Similarly, one- and two-bed units in Downtown Dubai, costing Dh80,000 and Dh125,000 pa, respectively, also saw average rentals rising 23 per cent in 2012 over 2011.

Average rents in Dubai Marina and Jumeirah Lakes Towers rose 20 per cent with one-beds costing for Dh75,000 and Dh55,000 pa, respectively.

On-bed units in Jumeirah Beach Residence increased 18 per cent to Dh80,000 pa.

In the villa side, the highest growth rates year-on-year was in the Springs community, where three-bedroom units were leased for Dh140,000 per annum.

The increase year-on-year was of 27 per cent.

Three-bed villas in Arabian Ranches rose 25 per cent to Dh155,000 pa, while the Palm Jumeirah remained the most expensive area to lease with a three-bedroom villa costing Dh325,000 per annum with the annual increase being 15 per cent.

Overall, the consultancy revealed of average increase across all residential types being 17 per cent.

“If demand continues, we expect to see a shift in the market from being predominantly tenant-led to one controlled by landlords, especially in quality, well managed and established developments,” said John Stevens, Managing Director, Asteco Property Management.

Asteco believes landlords will increasingly be demanding one to two cheque payments and will become less flexible in regards to leasing terms. Incentives such as free rent period are likely to disappear completely in the next six months.

The commercial market witnessed little movement during 2012 though overall leasing activity improved.

But, actual transactions levels declined during in the second half of 2012.

Rates remained under pressure, with the exception of Dubai International Financial Centre, which recorded a minimal growth of two per cent. Sales prices Tecom C, Business Bay and Bur Dubai declined 8 per cent, 7 per cent and 11 per cent, respectively.

Average prices in DIFC dropped by six per cent to Dh18,300 per square metre, while Business Bay fell seven per cent to Dh7,500 per square metre.

Asteco is optimistic the Company Law, though delayed often, may revitalise the office sales market but generally it does not expect any improvement in pricing and transaction levels in the first half of 2013.

On the contrary, Jones Lang LaSalle expects that prime office market rentals are likely to rise for the first time since 2008.

“Office rents have declined in Dubai since 2008, but we expect to see an increase in rents in selective properties in best locations this year.

“There will be some parts where there will be no increase largely because vacancy rates are as high as 60 to 70 in some office locations,” Craig Plumb, Head of Research, JLL Mena, had said.


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