Picture used for illustrative purpose only.
Inayat-ur-Rahman, Business Editor
The Dubai rental market continues its boost as the average rent witnesses a jump of 27 per cent this year, with the demand also getting a major boost in line with strong economic activity in the emirate, according to the Zoom Property Insights.
The average apartment rental prices have reached Dhs 91,795, while the rent of villas has jumped to Dhs 274,740. This shows an increase of 27.5 per cent and 25.7 per cent in both the respective sectors, according to the survey.
However, due to the rising prices, renters are reluctant to move to a new home. This is why there’s a decline in the number of new contracts, and hence, renewals are higher.
Ata Shobeiry, CEO of Zoom Property, is of the view that the rental property market will conclude the year on a strong note.
He said, “the Dubai rental market is cruising, and the latest data reveal exactly that. The prime areas, such as Palm Jumeirah, Downtown Dubai, Dubai Marina, and JBR, are performing exceptionally well, which is a great sign for the market. I believe 2022 will end on a very strong note for the rental market as FIFA World Cup 2022 Qatar is giving the short-term rental market a remarkable boost.”
Maintaining its reputation, Palm Jumeirah continues to be the most in-demand area for rental properties in Dubai.
Referring to Q3, 2022 data, the Zoom Property Insights state that the average rent for apartments in Palm Jumeirah rose by 22 per cent. Similarly, the villa segment in the community also showed a jump of around 32 per cent.
Besides that, Downtown Dubai recorded a major increase of 24 per cent in terms of average rental prices of apartments. Dubai Hills Estate, on the other hand, recorded the highest increase of 33 per cent for rental villas in Dubai.
Besides the aforementioned, JBR, Dubai Marina, Al Barari, Emirates Hills, and Jumeirah Bay are among other areas that have witnessed an increase in demand for rental properties.
The outlook for Dubai rental market in 2023 looks positive. According to the Zoom Property Insights, the rent for apartments and villas in Dubai will continue to remain elevated during the next year, paving the way for an even stronger 2023.
“Dubai property market is attracting HNWIs and foreign investors due to higher returns and stability, and this is going to impact the rental market as well. Despite the increase in rents, people will continue to relocate to Dubai, enjoy its upscale lifestyle, and explore professional & entrepreneurial opportunities, which, ultimately, will benefit the overall economy”, Shobeiry concluded.
Zoom Property is an emerging property portal in the UAE with a primary focus on Dubai, Abu Dhabi and Sharjah markets. The portal also features international properties in KSA, the UK and other regions on the platform to facilitate buyers and renters. It is also popular among developers, real estate brokerages and property sellers.
Meanwhile, Savills latest Prime Office Costs (SPOC) analysis for Q3 2022 shows that fit-out costs in key office markets around the world have continued to climb with inflation, rising an average of 10%. Increased rents in many markets are also contributing to higher total net effective costs for prime office occupiers, which include fit-out costs, rents and other costs.
Dubai’s net effective cost to occupiers of prime office space rose 3% on a quarterly basis at $108.7 psf / annum currently.
Overall, the markets which have seen the largest increases in net effective costs over the quarter ended September are largely clustered in the EMEA (Europe, Middle East and Africa) region, including Dublin (+7%), London City (+5%), Dubai (+3%), and Berlin (+3%).
Fit-out cost inflation varies slightly by region, says Savills, from 14% year-on-year (YOY) on average in EMEA, to 9% YOY in Asia Pacific and 7% YOY in North America, as global supply chain issues have affected all markets, albeit to varying degrees.
However, rental rises have seen much greater variation. European and Middle Eastern prime CBD office markets have seen an increase in average gross rents of 6% over the past year, due to both index-linked rental increases and higher energy costs, which are often factored into service charges. Furthermore, low vacancy rates in the core markets have supported an increase in asking rents, especially in the Middle East.
Swapnil Pillai, Associate Director – Research at Savills Middle East said: “The UAE economy is projected to grow around 6 -7% in 2022, making it one of the high-growth markets in the world. Economic growth combined with the government’s push towards diversification and policy changes to promote business and long-term residence has led to a strong interest from corporates to expand in or enter the UAE. Demand has been concentrated across prime properties, leading to limited availability and an increase in rents. An increase in fit-out costs due to inflationary pressures has further contributed to the overall increase in occupancy cost.”