Villa rents in Dubai rose by 2.6 percent in the second quarter of 2021, compared to the first quarter, outperforming the residential average as apartment rents declined by 0.5 percent, according to the latest research conducted by leading real estate services firm Chestertons.
Villa rents rose by 3.5 percent q-o-q, surpassing their Q2 2020 average.
“The rise in villa rents was principally driven by continued tenant demand for more open space and outside areas, with agents reporting a sustained increase in villa inquiries since the easing of social distancing restrictions last year,” Chris Hobden, head of Strategic Consultancy at Chestertons Mena, said.
“With work-from-home policies continuing across the private sector, even if on a part-time basis, we expect villa rents to outperform the wider residential average over the months ahead,” he said in a statement.
Palm Jumeirah experienced the highest increase in villa rents, at 3.9 percent year-over-year, followed by Jumeirah Golf Estates, Victory Heights, and The Lakes, which recorded increases of 3.4%, 3.1%, and 3.0%, respectively. The other locations also saw quarterly growth between 1.6 and 2.3 percent.
Across Dubai, apartment rents recorded modest declines over Q2, with a continuing tenant preference for villas as well as a long-standing oversupply, placing downward pressure on prices across secondary locations. In the second quarter of 2020, apartment rents fell by an average of 0.5 percent and remained 8.7 percent lower than in Q2 2020.
The average rent in Downtown Dubai increased 1.7 percent from one quarter to another, while Dubai Marina experienced a 1.5 percent rise and JLT saw a 1.1 percent raise. DIFC experienced the greatest quarterly decline, at 3.4 percent, followed by Discovery Gardens at 2.8 percent. There was a 2.5 percent decline in both Dubai Silicon Oasis and Dubailand q-o-q.
“While we expect apartment rents to face continued pressure medium-term, improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa, should serve to support demand,” Hobden said.
“While we expect apartment rents to face continued pressure medium-term, improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa, should serve to support demand,” Hobden said.
The second quarter of 2021 saw a significant increase in Dubai’s residential transactions, driven by the market’s positive sentiment and international buyer interest.
Dubai’s total residential transaction value increased by almost 50 percent q-o-q to Dh31.02 billion, up from Dh20.77 billion the previous quarter. Residential sales hit a record high in Q4 2013, surpassing Dh31.67 billion in residential sales. In Q1 2021, total residential transactions reached 14,426, a 35.48 percent increase over Q1 2021.
The volume of completed property sales in Q2 2021 accounted for 59 percent of the total value of transactions, while off-plan sales are yet to approach their pre-pandemic proportion.
“With residential transactions at near-record levels, increased international interest has been a key factor, with Dubai’s handling of Covid-19 supporting post-lockdown demand from buyers drawn by visa reforms, the emirate’s quality of life, and comparatively attractive pricing,” said Hobden.
“We have seen a clear improvement in market sentiment among UAE residents this year, with a desire to buy ahead of anticipated price rises, coupled with favorable mortgage rates and generous developer incentives, spurring sales.”
Villa prices in Q2 2021 were driven by strong demand from end-users and international buyers. Therefore, villa prices increased by 5.7 percent q-o-q, supporting a 9.1 percent increase y-o-y.
In Q1 2021, Dh830 per sqft was the average at The Meadows/The Springs, seeing a 6.6 percent increase. After The Lakes, Dh1,065 per sqft increased 6.5 percent from Dh1,000 in the previous quarter. There was a 5.4 percent increase in prices in Jumeirah Park, 4.9 percent in Palm Jumeirah, and 3.2% increase in Arabian Ranches.
Palm Jumeirah was the only location to see a double-digit increase, with average prices increasing by 12.4% year-over-year. Both The Lakes and The Meadows/The Springs experienced noteworthy gains of 8.7 percent and 8.6 percent, respectively.
In Dubai, the average price of an apartment rose by 0.8% q-o-q, though performance varied by location, and prices remained 3.7% below their Q2 2020 level.
Prices at The Views rose the most at 5.3 percent, with an average price of Dh1,085 per sqft, up from Dh1,030 the previous quarter. Downtown Dubai prices also rose 4.5 percent q-o-q. The prices at Jumeirah Lake Towers (JLT) and The Greens both increased by 3.0 percent in the third quarter, reaching Dh765 and Dh860 per square foot, respectively.
Across Dubai Marina, Motor City, Business Bay, and International City market segments, 2.2 percent, 1.8 percent, 1.5 percent, and 0.7 percent in price increases were reported respectively. There was a decline of between 1.0 percent and 5.1 percent at all other locations. 5.1 percent fell in Dubai, followed by 2.6 percent in Discovery Gardens, which saw a decrease of Dh483 per sqft.
Prices rose by 4.4 percent, 3.3 percent, 2.9 percent, and 0.3 percent in Downtown Dubai, The Views, the Greens, and Business Bay, while all other areas were down by 0.2 percent to 12.4 percent.