Average residential rents in Dubai continued to increase during Q4 2014, but at a slower pace than at the start of the year with average market rents increasing by around 3 percent quarter-on-quarter, and roughly 17 percent from the same period last year, according to research from global real estate consultancy firm CBRE.
Mat Green, Head of Research and Consultancy UAE, CBRE Middle East, said, “The delivery of new supply in recent months has increased competition for tenancies, resulting in a more cautious approach by some landlords who have become more realistic with their rental requests.”
“As the cost of living has risen over the past 12 months, there has been a more noticeable increase in demand for low to middle income units and also for non-prime areas of the capital. This in turn has driven rental growth in more affordable locations as a flight to quality continues.”
According to the CBRE report, the quarter also witnessed an increase in interest from end-users looking to purchase their own homes, driven by imminent lease expirations or planned relocations due to the rising rental costs.
Residential properties situated on the outskirts of the city have continued to gain popularity, principally due to affordability reasons. With sustained rental growth in central city locations, housing units situated in areas such as Khalifa City A & B, Mohammed bin Zayed City and Mussafah have become viable alternatives for price-conscious residents. The growing number of new schools, healthcare facilities and community retail centres is also helping to attract more family residents into the suburbs, stated the report.
“Prime master planned developments such as Al Raha Beach, Reem Island and Saadiyat remain the hot options for residents looking for quality housing units. A 2-bedroom unit in the St. Regis currently has rentals ranging from AED150,000 – 210,000 per year whilst similar units in Al Raha Beach have rents starting from AED140,000 per year,” added Green.
According to the report, the villa market continues to display more stable signs with limited available lease options and strong tenant loyalty resulting in limited volatility. During the quarter, annual rents for a typical four bedroom villa on Abu Dhabi Island started from AED190,000/unit/annum, with rates going as high as AED350,000/unit/annum for luxury villa units in prime locations. Similar residential types in off-island locations are currently being rented between AED140,000-AED180,000/unit/annum.
“Despite rising housing stock, the Abu Dhabi residential market continues to outperform most other property assets. In total, around 35,000 new residential units are expected to be completed over the next three years with a large portion being from within master-planned communities. Additionally widespread relocations are expected as residents look to move away from inferior properties,” Green added.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
