Tenants in Dubai carried on to enjoy lesser rents during the initial quarter of 2021 as it decreased by 11 percent year-on-year basis due to rigid competition in the residential market, recent data provided on Monday.
The initial quarter 2021 Dubai real estate review provided by ValuStrat provided that the residential rents were relatively rigid in comparison to the last quarter, as it recorded less than a percent decrease during the January-March period. The real estate consultancy also checked a 3.9 percent year-on-year hike in villa rents.
The ValuStrat reports provided that teh average rents for residential units in Dubai stayed firm at Dh76,910 during the main quarter.
“Tenants paid Dh55,000 average rents for apartments and Dh211,485 for villas across the Dubai,” according to the report.
The data further shows that Dubai’s residential net yields averaged 6.1 percent during the quarter, with apartment yields staying static at 6.4 percent and villas at 4.9 percent. It also showed that residential occupancy was calculated at 80 percent during the quarter.
Average yearly rents for 2-bed villas cost Dh103,000 whereas 3-bedroom and 4-bedroom villas were available at Dh150,000 and Dh212,000, respectively.
The report provided that Dubai tenants paid an average of Dh35,000 yearly to rent for studio apartments, Dh52,000 for one-bedroom, Dh78,000 for 2-bedroom, and Dh114,000 for 3-bedroom apartments.
Expo may drive rent up
Industry stakeholders are of the opinion that rents for residential units in Dubai will go up in the second 50% of the year ahead of Expo 2020 in October.
Rizwan Sajan, founder, and chairman of Danube Group provided that the pressure will be carried on the rental rates and all asset classes this year up till the economy regains at a smaller pace or recovers from the pandemic shocks.
“With the expected supply that is / will be delivered this year (42,500 units ) an increase in rent won’t be that feasible. Expo 2021 is unlikely to have a significant direct impact on the real estate market, it could possibly boost market sentiment,” Sajan told Khaleej Times on Monday.
Imran Farooq, CEO, Samana Developers, provided that the recent trend of rising rents in villas and townhouses will be converted into across-the-board recovery due to the magnitude of the six-month-long Expo 2020.
“Recently, the UAE government reiterated its target of over 25 million visits, combined with the introduction of Covid-19 passports and online features of the Expo, which will improve in-person and online visitors and tourists influx,” Farooq told Khaleej Times on Monday.
said Haider Tuaima, head of Real Estate Research at ValuStrat, said rents may increase in certain areas ahead of Expo 2020.
“The general theme for the remainder of the year is that average citywide rents are expected to stabilize, however, there will be pockets of increased asking rents in well-established locations,” he said.
Record sales transactions
The Dubai-based land counseling firm also revealed the most elevated number of home and office units’ business transactions during the principal quarter and said the workplace ValuStrat Price Index (VPI) has settled while the residential VPI saw quarterly upgrades interestingly since 2014.
The residential VPI showed an average quarterly improvement of 0.8 percent, as the initial three months of the year saw speed up sure patterns interestingly since 2014. All settled freehold villa locations monitored by the VPI saw capital qualities improve since the last quarter, going from 1.8 percent to 5.4 percent. However, just 50% of apartment areas improved in esteem, a few zones saw decreases of up to 2.8 percent.
On a yearly basis, all locations saw value drops, some in single digits. The best performing freehold regions were International City, Arabian Ranches, The Meadows, the Lakes, and Palm Jumeirah. Citywide, private capital qualities were 10.9 percent lower than a similar period a year ago, as indicated by the report.
“A positive trend that commenced during the second half of 2019, only cut short by the Covid-19 restrictions last year, has now intensified with improved investor confidence, boosting demand, with a record number of title deeds registered, and a gradual growth towards the previous peak,” said Tuaima.
The ValuStrat report additionally said that office sales transaction volumes flooded 41% quarter-on-quarter basis and took off 45.7 percent on a year-on-year basis, while office ticket sizes were 16.2 percent higher than a year ago, however 21.7 percent lower than when contrasted with last quarter of 2020.
“Improved buyer confidence appears evident in many parts of the Dubai residential market, with statistics showing increased numbers of sales transactions and price rises. Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more sought-after apartment locations too,” said Declan King, managing director and group head of real estate at ValuStrat.
“Influence of the Covid-19 crisis on housing requirements and an undersupply in some communities and sub-sectors are factors as to why this is happening. Other reasons may also include a perception that prices had actually overcorrected and that perhaps they now represent good value, with potential for upside gain should this prove not just to be a temporary phase and the market continues to recover,” he said.