UAE – Apartment rentals in Dubai will continue to fall for the remainder of 2021 but some prime and up-and-coming communities are witnessing a rise in rentals due to residents continuing to flock to high-end apartments following consistent fall of rents over the years.
The Dubai market’s performance is right now clearly divided. Villa rents on average rose by 4.7%, though average apartment rents have fallen by 10.3% in the previous year to April 2021.
It is currently calculated that about 17% of property units in Dubai are vacant, making the market highly tenant favorable.
In spite of the rise in some areas, HP Aengaar, CEO of Asteco, says landowners carried on to provide incentives including discounts, flexible payment terms of up to 12 cheques, options to pay with debit, and credit card, and agency fee waivers to retain tenants. Aengaar said this would change if the demand continues to rise.
Asteco predicts 30,000 apartments and 5,000 villas hitting the market in Dubai this year.
Communities where rents are decreasing
Taimur Khan, head of research at CBRE Middle East, said the main decreases in rental rates between January to May 2021 have been found in Al Jadaf, Bluewaters Island, Trade Center, The Greens, Barsha Heights, and Jumeirah Lake Towers (JLT).
“One of the trends which have underpinned these declines, in most of these locations, is a flight to quality, with tenants taking advantage of a more favorable market to move into newer developments and communities which offer more integrated amenities,” said Taimur.
However, some communities follow the pattern and show a more balanced market where landlords have had the option to get material raises in rents, he added.
Aengaar says rents in affordable communities like International City and Discovery Gardens have seen a modest fall in Q1.
Communities where rents are increasing
Aengaar said there is a rise in nearly all villa communities across Dubai, especially in forthcoming regions like Dubai Hills Estate and Wasl Gate. There is also a demand for investment properties in high-end and mid-end market apartments including DIFC, Downtown Dubai, Palm Jumeirah, Business Bay, and Dubai Marina/JBR.
Taimur Khan said there is a wide range of communities that have seen expansions in rents, out fundamentally in District One, Emirates Hills, The Lakes, MBR City, Dubai Hills Estate, and Jumeirah Golf Estates.
Edward Macura, the partner at real estate consultancy Core, said waterfront and established villa communities such as Palm Jumeirah, Emirates Hills, The Springs, The Meadows, and Arabian Ranches have witnessed a sustained uptick in rents over the first half of 2021. However, the external spaces of Jumeirah Villa Circle and villa communities in Dubailand keep on seeing some descending pressing factor in rents because of relatively higher levels of supply.
For most apartment districts, Macura sees tenant retention continuing to be the main focus.
“We expect greater tenant demand as the economy further improves on the back of strong government initiatives, however, the apartment rents are expected to recover at a slower pace,” he added.