Rent rises in Dubai’s established communities is likely to force some tenants to move to more affordable communities, according to Asteco Property Management.
“Residents will be priced out of established communities to more affordable, less developed areas due to the rent rises with landlords controlling terms of rents and payment,” the property management company said in its second-half report on Dubai real estate.
“Rental growth is not expected to slow down as improving market conditions fuel residential demand. The gap between asking rents and existing rates is likely to grow as new tenancy contracts are not protected by the rental cap law.”
The increase in rents will also lead to more relocation to budget-friendly neighbouring emirates. Rents in the Northern Emirates are lower than the peripheral localities in the emirate.
International City beats Marina
Rents in International City grew at a faster rate than Dubai Marina in the second quarter, Asteco said.
Annual rental for a two-bedroom unit rose 11 per cent to Dh42,500 in the second quarter, a 27 per cent annual increase, while Dubai Marina grew 8 per cent, 20 per cent year-on-year (yoy) with two-bedroom apartment now leasing on average for Dh110,000 per year.
Among the villa developments, the Springs and the Meadows were the top performers on the rental side, recording 10 per cent and 8 per cent increases, respectively, over the last three months with average annual rents up 35 per cent and 17 per cent, respectively.
A three-bedroom villa in The Springs is currently renting for Dh160,00 per annum, while a similar same unit in Meadows leases for Dh240,000 per year.
Jumeirah Village tops villa community
Apartment sales prices rose by average 12 per cent with y-o-y growth standing at a 38 per cent. In comparison, average villa sales prices rose 8 per cent, registering a 24 per cent increase.
Discovery Gardens jumped 17 per cent to Dh7,550 per square metre in the second quarter, 75 per cent yoy. The Greens saw a 15 per cent growth with average prices at Dh12,400 per square metre, an annual increase to 44 per cent. Downtown Dubai increased 18 per cent (38 per cent yoy) remaining the most expensive area in Dubai to buy an apartment. The average price is Dh17,750 per square metre.
The best performing areas for villa sales were Jumeirah Village which rose 25 per cent to Dh8,100 per square metre, a 40 per cent increase yoy. The Springs recorded 11 per cent growth, reaching Dh10,750 per square metre, a 25 per cent annual growth rate, while Arabian Ranches saw Q2 increase of 10 per cent, 19 per cent yoy. Units are now selling at Dh11,850 per square metre.
JLT office prices double
The office sector showed continued growth in the second quarter with rents in Jumeirah Lake Towers rising 75 per cent to Dh1,125 per square metre, a 110 per cent yoy increase.
Dubai Investments Park rose 33 per cent to Dh650 per square metre, a 50 per cent yoy increase. Business Bay saw an increase of 27 per cent, a 36 per cent annual increase, with prices averaging Dh1,025 per square metre.