Based on its Quarterly Residential Report, Asteco – UAE’s largest property services company, 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 Dhs100,000 and Dhs140,000 respectively. On the other extreme, the lowest rentals can be found at International City with studios ranging from Dhs42,000 and one-bedroom units available at around Dhs58,000.
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 Dhs65,000 to Dhs85,000, marking a 31% increase. Interestingly, two-bedroom units at International City witnessed a 36% increase in rents (from Dhs70,000 to Dhs95,000) 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% increase for one-bedroom units and a 21% increase for its two-bedroom apartments. Annual rentals increased by Dhs20,000 and Dhs30,000 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 Dhs175,000 while a similar property at Arabian Ranches and Jumeirah would rent at over Dhs300,000. A five room villa at Jumeirah with an annual rent of Dhs450,000 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.
Founded in Dubai in 1985, Asteco is the UAE’s largest property services company. Its services include retail, commercial and residential sales and leasing; strategic consultancy; property management and marketing; feasibility studies and valuations; and research and investment.
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