Wednesday, June 27, 2007

Lack of timely delivery has resulted in shoot-up of rent rates

There is a shortage of 26,000 housing units, in comparison to the expected delivery of 40,000 units during 2006. This has resulted in rise in rents during the first quarter of this year, according to results of a new research.

Due to delays in key projects, only about 14,000 units were delivered in Dubai. This demand-supply gap resulted in rising rents, as the rentals for two bedroom apartments rose to eighteen percent during the first quarter of 2007, in comparison to the same period last year, says Asteco, a property management company. The rents for single, and three bedroom apartments rose by fourteen and thirteen percent respectively.

However, Asteco, in its report, mentioned that as the increase in rent rates were mainly due to the shortage of completed residential units, a large number of developments are expect to hit the market by end of this year and thereafter the rents are expected to stabilize.

The government had also recently stated that the house items and housing rents had risen by fifteen percent in the UAE, with inflation touching 9.3 percent during 2006. The average annual rents for single, double and three bedroom apartments were Dh.80,000, Dh.115,000, and Dh.140,000 respectively during the first quarter.

Dubai Marina recorded highest rentals of Dh.110,000 to Dh.210,000 on average and rents increased by 20 percent during fourth quarter.

Villa rentals increased by fourteen to fifteen percent in Umm Suqeim quarteron-quarter and Garhoud. The rentals in Old Dubai were highest in Jumeirah 1, and ranged from Dh.270,000 to Dh.500,000. However, the villas are said to be scarce in supply than the apartments.

Asteco report states that the steep increase in Dubai rents has resulted in increase in demand of residential accommodation in nearby emirates such as Fujairah, Ajman and Sharjah.

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