A new analysis shows that Dubai’s rental market continued to grow in the third quarter of 2021, but the trend could be short-lived because thousands of new residential units are expected to come online before the year’s end.
According to a new report from real estate consultancy Asteco, apartment and villa rents in the emirate increased by 3 percent and 6 percent, respectively, but the trends remain below those seen in 2014.
Before the end of the year, 8,000 new apartments and 1,300 villas are expected to be built. These new flats and villas will be added to the 12,175 new flats and 1,600 new villas that were completed between January and September.
Dubai’s property supply
After COVID-19 restrictions were lifted in 2020, Dubai’s property market has seen an increase in demand, as buyers snap up residential properties to take advantage of low prices and attractive interest rates. As a result of Expo 2020, the demand from tenants and investors has increased as well.
“As expected, the start of the Expo 2020 has lifted real estate demand and rental rates. However, the currently perceived positive market sentiment is believed to be short-term considering the significant amount of upcoming supply,” Asteco said.
“Based on recent construction progress and developer announcements… another 9,300 apartments and villas [will be handed over] by year-end, with the majority of this supply being attributed to the Azizi Riviera development,” it said.
Sales prices
According to Asteco, the momentum of growth in sales prices will continue into the second half of the year and into 2022, bolstered by Expo 2020, vaccination campaigns, and visa initiatives.
Villa properties experienced significant quarterly and annual increases of 9 percent and 37 percent in the third quarter of the year.
“Government initiatives in terms of new visa programmes and regulations to attract foreign investment, the easing of COVID-19 restrictions, and the successful rollout of the vaccines are expected to boost the economy,” the report said.
According to the Dubai Land Department, Dubai recorded real estate transactions worth 3.2 billion dirhams ($871 million) during the last week of November.