Recovery began after the pandemic as many foreign workers returned with the recovery in the job market, as well as the inflow of HNWIs.
Rents in Dubai will further rise in 2023, especially in the prime markets where demand is outstripping supply, while the affordable areas are likely to see moderate growth in rental
Rents in the emirate were on a downward trend since 2014 but recovery began after the pandemic, as many foreign workers returned with the recovery in the job market as well as the inflow of high-net-worth individuals to the market.
David Abood, partner at real estate consultancy Core, expects rents to rise across the board in 2023.
“The prime market is anticipated to continue witnessing higher rents as demand for this segment outstrips supply. With most of the upcoming supply handing over in the affordable and mainstream apartment districts, we expect this market segment to see relatively moderate rental increases,”
Ayman Youssef, vice-president, Coldwell Banker sees luxury villas in prime locations such as Emirates Hills, and Palm Jumeirah picking up the most in terms of rentals next year.
“The major reason for this is the influx of wealthy migrants from Russia and Ukraine who are a major contributor to the current inflation in the property market and we see this trend indicating an upward in 2023, too. On the other hand, beachfront properties, skyline views and gated communities are also likely to be more in demand and which will subsequently lead to a subsequent rise in rents,”
According to Richard Waind, group managing director at Betterhomes, there are signs that rents are now starting to level out, with increases in the last three months of just under two per cent.
“With under 30,000 new homes to be delivered in 2023 and very few villas or townhouse communities, it is no surprise that well-located homes have experienced the highest rent prices. I expect that scenario to play out through 2023. High renewal rates will exacerbate traditional villa communities' lack of rental stock, putting further upward pressure on rents,”
Rents lower than 2014 level
Despite the increase, real estate industry executives say that rents are still lower than their 2014 peak.
“Rents fell between 2014 and 2021, and while rents have increased across all communities over the last 24 months, rents remain below their 2014 peak. Apartments, in particular, have some way to go back to previous highs. In Dubai Marina, for example, average rents are Dh121,000, nine per cent below their 2014 peak, while JLT and Sports City rents remain 30 per cent and 40 per cent behind, respectively,”
said Richard Waind.
Citing another example, he said average rents in Arabian Ranches currently stand at Dh217,000, six per cent below their previous peak seen in 2014.
David Abood says some mid-market districts are still below their 2014 peak values, including villa districts such as Jumeirah Village Circle, The Springs and the Meadows and apartment districts such as Discovery Gardens, Dubai Sports City, Jumeirah Village Circle and JLT.
“When comparing 2014 peak values to 2022, it is important to note that there were over 200,000 fewer units in the market and nearly 1.2 million fewer residents than today. Therefore, the current rental values reflect a much more mature market with robust socio-economic factors underlining the city’s growth.”
Affordable areas in Dubai
Real estate industry executives revealed that there are still many areas in both Old Dubai and New Dubai where rents are below their 2014 peak level.
David Abood of Core says the established districts of Bur Dubai, Deira and freehold districts including International City, Liwan, Dubai Silicon Oasis, Discovery Gardens, and Dubai Sports City are amongst the most affordable apartment districts in the emirate.
Ayman Youssef added that some of the most affordable areas in Dubai are International City, Dubai Silicon Oasis, IMPZ, and Town Square.
News Source: Khaleej Times