Villa rents in Dubai go up as demand for bigger homes increases post-Covid

UAE Golden Visas also drive buyers' interest in larger houses worth Dh50 million or more

Dubai is facing a shortage of villas as demand outstrips supply, resulting in rentals seeing more than double jump as against the apartments in the first half of this year.

Industry analysts and executives say that the trend of demand for bigger homes that started after the Covid-19 pandemic is sustaining and is now being driven by new visa reforms such as Golden Visas as well. This resulted in increased demand both from tenants and buyers for villas and townhouses.

During January-June 2022 period, villas and townhouses rents in Dubai jumped 64 per cent and 33 per cent, respectively, as compared to a 29 per cent increase in apartments, reflecting demand for villas staying strong even after the pandemic, according to Betterhomes data.

It said villa

"demand is still firmly outstripping supply, and it is doing so at a more sustainable rate."

According to Asteco's second-quarter 2022 report, 780 villas were completed in the first half of 2022 while a total of 3,300 are expected to be delivered during the whole year.

The report revealed that villas recorded a six per cent rise in rentals and four per cent for apartments in Q2 whilst annual growth stood at 23 per cent and 15 per cent, respectively.

Dubai's five most economical areas for yearly rentals for a 3BHK villa are:

"Demand for larger unit types, particularly villas and townhouses, with adequate useable outdoor areas (i.e. balconies and gardens) and a strong community offering remained the focus for residents, thus driving rental and occupancy rates,"

the report said, adding that average villa prices rose by four per cent, same as the apartment prices in the second quarter.

Abbas Sajwani, CEO of AHS Properties, said housing demand is rising in general, thanks to forward-thinking social and economic reforms passed by the Dubai government in the past year, boosting its value proposition for foreigners to come set up businesses and work here.

He credited the government's excellent handling of the pandemic that encouraged foreigners to move here as Dubai is ranked as one of the safest cities in the world to live during the pandemic.

"As for the rising demand for villas, it has been widely recognised that Covid-19 changed customer preferences towards private outdoor living space. People moved from towers and high rises with shared communal spaces and elevators, to secure more private outdoor areas for their own leisure and for their children to play. Additionally, there is a rising demand for ultra-luxury homes,"

said Sajwani.

AHS CEO added that the company is focusing on this niche market opportunity in buying and selling homes worth Dh50 million and more.

"The luxury property sector has been attracting investors and high net worth individuals equally. However, with reformed visa rules set to be implemented in September 2022, we will see more foreign investors venturing into the market. The luxury property market is expected to double its share this year due to an influx of keen investors,"

he added.

Ayman Youssef, Vice-President of real estate firm Coldwell Banker UAE, said Dubai is reportedly facing a shortage of villas because the effects of the pandemic led people locally and globally to realign their priorities towards home, family, health and wellness.

"This has been one of the biggest contributors to the rise in demand for villas and other luxury properties. In addition, the introduction of various new visas, the benefits of the Golden Visa along with the new real estate laws, have encouraged people to consider investing in bigger properties which they can use for their personal, permanent and long-term stay. This has encouraged major developers to plan more luxury and villa property launches,"

he said.

He said 2021 witnessed a plethora of buyers for luxury villas and penthouses who were looking for better quality properties and bigger layouts and sizes.

"Transactions in certain luxury areas like Palm Jumeirah and Emirates Hills have soared and we've seen some incredible properties sold in 2021. Owing to the strong demand in the luxury segment, inventory is low. While low inventory sure has stimulated the prices of villas and other luxury properties to rise, the other reason that has led to the rise in price and rents is the relaxation of visa and real estate investment laws,"

added Youssef.

Coldwell Banker's vice-president said two years ago, people bought properties primarily for investment purposes but today things are a lot different. "Expats are considering Dubai as their permanent residence and are therefore choosing villas and bigger properties keeping in mind the long-term benefits," said Youssef.

News Source: Khaleej Times