Friday, July 19, 2013

Residential rents easing out in prime locations in Dubai

Residential rental prices in Dubai, particularly in prime locations are showing signs of easing, despite the landlords demanding more money this year. This trend has largely been attributed to the upbeat construction sector and the budget-conscious tenants.

Dubai rentals have gone up due to renewed confidence in the economy and the real estate sector. The cost of leasing an apartment and villa has increased by 3 percent and 4 percent respectively during the first quarter of this year, and the rents for apartments have gone up by 12 percent when compared year-on-year.

However, leading real estate consultancy, Jones Lang LaSalle (JLL) said that rents are now growing at a slower pace, largely due to tenants’ migration to cheaper locations, coupled with fresh supply of villas and apartments.

Primary areas in particular, are now showing slower paces of growth, and areas such as Downtown, Business Bay, Burj Khalifa and Dubai Marina, are seeing housing units get more expensive in prime locations.

The growth in prices and rentals may be easing due to high levels of future supply, tenants relocating to cheaper locations, limited debt availability and due to more mature market regulations, said Alan Robertson, CEO of JLL Middle East and North Africa.

There are more villas and apartments to be occupied this year. About 3000 housing units were added to Dubai’s residential stock during second quarter of this year, and if completed as scheduled, about 38,000 more are likely to enter the market between 2013 and 2015, says the JLL report.

An Asteco report in April noted that rents jumped considerably in International City, where a double bedroom unit recorded 8percent increase, while in most other areas, there has been an increase of only about 3 percent. Increased demand for budget accommodation contributed to upward movement of rents in affordable and secondary areas, said the JLL report.

No comments: