Besides villas and townhouses, demand for expensive homes in premium neighborhoods of Dubai is picking up, as some tenants are ready to splurge on luxury living during the pandemic.
Rental rates in better quality properties, for example, those in The Palm Jumeirah and Dubai Marina, have recently enrolled an uptick, with empty units getting snapped up in practically no time, land firm Allsopp and Allsopp said.
“The demand for high-end luxury homes has increased and now we’re seeing Palm Jumeirah [properties] renting before listings get a chance to go live on property portals or within seven days if they do go live,” the firm said in a report Wednesday.
Analysts had provided that with home-schooling and remote working becoming the new norm for many people, properties in villa and townhouse developments witnessed a rise in demand.
But those who have more optional income now want to have luxury living as well. The pattern has sent costs higher in certain communities.
As per Allsopp & Allsopp, a two-bedroom apartment in Silverene Tower A in Dubai Marina, which was renting for 100,000 dirhams in May 2020, was issued for 125,000 dirhams in January 2021.
Likewise, a five-room Garden Home on Palm Jumeirah that was offered for 290,000 dirhams ($79,000) during the second quarter of 2020 would now be able to interfere with one by 550,000 dirhams, an expansion of 90%.
Over 50 percent decline
The property market was in its worst state lately when economies around the globe grounded to an end because of the worldwide lockdown a year ago. Demand for properties began to go up after the limitations facilitated, however, overall, the market has not yet recuperated to pre-COVID-19 levels.
As indicated by the most recent report from Asteco, apartment rents have fallen by more than 50% since their top in 2008 and in excess of 40% since the second top in 2014. A year ago, apartment rents fell by 17% to 18 percent compared to 2019.
“As a result of the COVID-19 lockdown, the rental market suffered – viewings were non-existent and tenants found themselves in favor of renewing rental contracts as opposed to moving in such uncertain times,” Allsopp & Allsopp said.
“This led to a drop in demand and therefore a drop in average rental prices across Dubai. However, in certain communities, we started to see slight increases in the average rental property price.”
Market trends
The property firm additionally noticed that more landowners are currently ready to lease their homes at an asking cost. In February 2020, just 22 percent of landowners accomplished the asking cost for their property compared with 37% in February 2021.
However, one-cheque payments remain largely unpopular.
“Gone are the days that companies pay for rent in one cheque. In 2021 so far, we have seen one cheque rental payments decrease by 28.3 percent compared to the beginning of 2020,” said Lewis Allsopp, chief executive officer of Allsopp & Allsopp.
A large number of tenants are still hesitant to go into long-haul tenancy contracts. The financier firm said that more individuals are hoping to rent on a short-term basis, as they need to ensure they are protected in their positions prior to focusing on a one-year rent.
“Landlords are becoming more inclined to let their property short-term for some of the same reasons. They are looking for flexibility with their property and in some cases steering away from a locked-in contract where a year’s notice needs to be given before they can sell the property,” Allsopp & Allsopp said.