Average rents in Jumeirah Village Circle (JVC) rose the maximum in the last four years, followed by Jumeirah Lakes Towers (JLT) and Dubai Marina master developments, an analysis of Dubai’s official rent index by Unitas Consultancy reveals.
JVC saw rents rising by 68 per cent since October 2010 to November 2014.
Three-bedroom apartments rose 74 per cent, with two- and one-bed units gaining 72 per cent and 69 per cent, respectively. Studio units were up 60 per cent.
In JLT, average rents rose by 58 per cent. Three-bed units rose by 69 per cent, while studio, one and two-beds jumped by 63 per cent, 38 per cent and 59 per cent, respectively.
Dubai Marina was third on the list of 10 communities, registering an average increase of 50 per cent.
Rates for two-beds were up 63 per cent, followed by four-beds at 57 per cent. Studio, one- and three-beds rose by 32 per cent, 45 per cent and 54 per cent, respectively.
“These rapid increases in rents are leading buyers to mortgage rather than rent as it indicates paucity in supply, further validating the trend seen of higher mortgage activity in the two-bedroom plus space in apartments and four-bedroom plus space in villas,” Unitas said in a report titled ‘Dubai: Amidst a slowdown, underlying strength’.
Recent rent rises reinforce the trend of renters becoming owner-occupiers, the report states. A unit-wise mortgage analysis shows that the last eight years, two bedrooms have had the highest number of mortgages in the apartment segment, while in the villa category it is four-bedroom plus.
A comparison between the mortgages of four-bedroom units between villas and apartments shows a clear preference by end-use for villas.
Mortgages for four-bedroom plus villas have doubled in the last four years, while four-bed apartments remained flat, the report adds.
A time series analysis of transactions for both apartments and villas shows a clear upwards trends for mortgages, indicating stronger end-user base for Dubai.
Villa mortgages as a percentage of total volumes has risen by 10 per cent year-on-year (y-o-y), while apartments have risen by 6 per cent, exhibiting a steady rise.
Transactional analysis conducted over the last year (September 2013 to September 2014), however, reveals that volume has declined by approximately 50 per cent on a y-o-y basis, which reaffirms market reports that 'speculative froth has disappeared'.