Slowdown in residential rent increases
The much-awaited slowdown in residential rent increases has finally begun in certain areas of Dubai, says a prominent property services company in UAE.
Asteco’s Quarterly Residential Report, observed no significant changes in Dubai’s annual rents when comparing this year’s first quarter annual rental rates over the last quarter of 2007.
“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,” said Andrew Chambers, Managing Director of Asteco.
“Needless to mention, the reduction of the rent cap from seven to five per cent has certainly had a desirable impact as well,” he added.
At present, Palm Jumeirah and Old Town Burj Dubai areas in Dubai command the highest annual rents, with studio and one-bedroom annual rentals at Dh100,000 and Dh140,000 respectively. On the other extreme, the lowest rentals can be found at International City with studios ranging from Dh42,000 and one-bedroom units available at around DH58,000.
When comparing year-on-year rental changes in Dubai, the highest increases were reported at the Greens for studios where average annual rents increased from Dh65,000 to Dh 85,000, marking a 31 per cent increase. Interestingly, 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.
Chambers added, “The rental increase seen at International City is mainly due to relatively fewer two-bedroom apartments available and, at that price, no guesses why demand is high.”
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. Dubai Marina saw only marginal changes.
Rental rates for villas in Dubai, which are determined based on location, size and condition saw Mirdiff commanding the lowest rates, while Jumeirah commands the highest asking rates due to its close proximity to the beach and Sheikh Zayed Road.
Average annual rent for a four-bedroom villa at Mirdiff is Dh175, 000 while a similar property at Arabian Ranches and Jumeirah would rent at over Dh300,000. A five room villa at Jumeirah with an annual rent of Dh450, 000 to 500,000 would be snapped up immediately by UAE nationals and European expatriates. No substantial increases in rents were observed compared to the past quarter.
“Demand and supply will always determine the value of a property and as a result its rent. Rents in Dubai could not continue to soar. Prices will still increase but not at the phenomenal rate we have seen over the past three years. Residents and investors can be rest assured that as more projects are delivered, the market will stabilise in the medium term,” added Chambers.
Compiled and updated quarterly since 2006, Asteco’s research reports include the survey and compilation of residential and commercial rental analysis for each emirate of the UAE. Source
Asteco’s Quarterly Residential Report, observed no significant changes in Dubai’s annual rents when comparing this year’s first quarter annual rental rates over the last quarter of 2007.
“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,” said Andrew Chambers, Managing Director of Asteco.
“Needless to mention, the reduction of the rent cap from seven to five per cent has certainly had a desirable impact as well,” he added.
At present, Palm Jumeirah and Old Town Burj Dubai areas in Dubai command the highest annual rents, with studio and one-bedroom annual rentals at Dh100,000 and Dh140,000 respectively. On the other extreme, the lowest rentals can be found at International City with studios ranging from Dh42,000 and one-bedroom units available at around DH58,000.
When comparing year-on-year rental changes in Dubai, the highest increases were reported at the Greens for studios where average annual rents increased from Dh65,000 to Dh 85,000, marking a 31 per cent increase. Interestingly, 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.
Chambers added, “The rental increase seen at International City is mainly due to relatively fewer two-bedroom apartments available and, at that price, no guesses why demand is high.”
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. Dubai Marina saw only marginal changes.
Rental rates for villas in Dubai, which are determined based on location, size and condition saw Mirdiff commanding the lowest rates, while Jumeirah commands the highest asking rates due to its close proximity to the beach and Sheikh Zayed Road.
Average annual rent for a four-bedroom villa at Mirdiff is Dh175, 000 while a similar property at Arabian Ranches and Jumeirah would rent at over Dh300,000. A five room villa at Jumeirah with an annual rent of Dh450, 000 to 500,000 would be snapped up immediately by UAE nationals and European expatriates. No substantial increases in rents were observed compared to the past quarter.
“Demand and supply will always determine the value of a property and as a result its rent. Rents in Dubai could not continue to soar. Prices will still increase but not at the phenomenal rate we have seen over the past three years. Residents and investors can be rest assured that as more projects are delivered, the market will stabilise in the medium term,” added Chambers.
Compiled and updated quarterly since 2006, Asteco’s research reports include the survey and compilation of residential and commercial rental analysis for each emirate of the UAE. Source
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