(MENAFN- Khaleej Times)
Palm Jumeirah, Dubai Marina and Downtown have seen the highest rental growth in the apartment category in Dubai following the outbreak of the pandemic.
According to data shared by Real estate consultancy Asteco, these areas were followed by Jumeirah Village and Jumeirah Beach which saw the highest increase between the first quarter of 2021 and Q1 2024.
In the villa category, the highest rental growth was recorded in Jumeirah Islands, Palm Jumeirah, Dubai Sports City, Dubai Hills Estate and Damac Hills during the comparative period.
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The emirate's residence property market made a strong recovery post-Covid, consistently outperforming global peers. While the initial recovery was most pronounced in the luxury segment, impressive growth has been recorded across all property types.
In 2020 when the pandemic broke out, property prices and rentals saw a major drop as companies cut jobs, forcing many people to leave the country.
But in late 2020 and early 2021, Dubai began recovery and saw a strong inflow of foreign funds into the real estate market after the government successfully overcame the pandemic, pushing property prices and tenants higher till they peaked in 2023.
The luxury segment led the recovery and growth of the property market and saw unprecedented demand from foreign investors and high-net-worth individuals.
As a result, the emirate saw a big increase in population of over 269,000 between Q1 2021 to Q1 2024. It surpassed the 3.7 million mark in June 2024.
John Allen, CEO of Valuation and Advisory at Asteco, said properties located in highly sought-after areas such as Dubai Marina, Downtown Dubai and Palm Jumeirah command premium rents due to their exclusivity, amenities, and proximity to key business districts and leisure attractions.
“High-quality properties within self-sufficient communities, developed and managed by reputable firms, consistently attract strong demand and command premium rental rates. Some established communities with desirable features, such as family-friendly environments, proximity to schools and green spaces, experience limited new supply – leading to increased competition for available units and driving up rents,” said Allen.
John Allen. Photo: Supplied
Moreover, popular building and unit features driving rental demand include flexible workspaces such as private home offices and co-working spaces , advanced technology integration like connectivity, automation and AI, larger units with ample outdoor space, lower density developments and increased storage space, he added.
Areas with the lowest rental increases
All areas of Dubai have recorded strong levels of growth over this period. Even the 'slowest' areas have seen notable increases, ranging from 16 per cent to 44 per cent.
In the apartment category, Asteco data showed that the least increases were seen in Meydan/MBR City, Mirdif, Bur Dubai, Dubailand and Deira. Damac Hills 2, Dubailand, Dubai Silicon Oasis, Mirdif and Reem saw the slowest increase in rentals in the villa segment during the comparative period.
Allen added that oversupply in some areas, particularly those focused on more affordable housing in tertiary locations like areas near Al Qudra Roundabout, along the E611 and near Al Maktoum International Airport, and older properties with dated amenities, tend to experience slower rental growth due to less competitive positioning.
Also, established areas like Deira, Bur Dubai and Mirdif, where landlords were less aggressive with rent increases, saw more moderate growth rates.
Properties located in less popular areas, farther from key attractions or business hubs, or with limited access to public transportation may struggle to attract tenants, leading to lower rents, added Allen.
Property outlook
Going forward, Asteco doesn't subscribe to the 'undersupply' scenario in the local property market.
Whilst popular locations will continue to see strong demand levels and moderate rental growth,“we anticipate that tertiary locations, such as those along Dubai-Al Ain Road, Lehbab Road, Al Qudra Roundabout, the E611 corridor, and areas near Al Maktoum International Airport, are poised for a marked uptick in rental rates.”
This surge is primarily driven by a spillover effect as tenants are gradually priced out of more centrally located and established communities due to escalating rental rates.
As affordability becomes a growing concern for many residents, these previously less sought-after areas are gaining traction due to their relatively lower rental costs. Improved infrastructure and accessibility, coupled with attractive amenities, are further enhancing their appeal, despite the distance from the 'centre'.
“Dubai's economy demonstrates continued resilience in the face of global challenges. The Emirate's unwavering focus on enhancing the quality of life, attracting skilled professionals and fostering a robust economic environment will continue to draw a significant influx of expatriates, ensuring sustained demand and resilient rental rates in the residential market,” added Allen.
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