Apartment rentals in Dubai will continue to decline for the remainder of 2021 but some prime and up-and-coming communities are seeing an increase in rentals due to residents continuing to flock to high-end apartments following the consistent decline in rents over the years.
The Dubai market’s performance is currently clearly fragmented. Villa rents on average increased by 4.7 per cent, whereas average apartment rents have fallen by 10.3 per cent in the past 12 months to April 2021.
It is currently estimated that around 17 per cent of property units in Dubai are vacant, making the market highly tenant-friendly.
Despite an upswing in certain areas, HP Aengaar, CEO of Asteco, says landlords continue to offer incentives including discounts, flexible payment terms of up to 12 cheques, options to pay with debit and credit cards and agency fee waivers to retain tenants. However, Aengaar said this could change if the demand continues to increase.
Asteco foresees 30,000 apartments and 5,000 villas hitting the market in Dubai this year.
Where rents are falling
Taimur Khan, head of research at CBRE Middle East, said the most significant declines in rental rates between January to May 2021 have been seen in Al Jadaf, Bluewaters Island, Trade Centre, The Greens, Barsha Heights and Jumeirah Lake Towers (JLT).
“One of the trends which have underpinned these declines, in most of these locations, is flight to quality, with tenants taking advantage of a more favourable market to move into newer developments and communities which offer more integrated amenities,” said Taimur.
However, some communities buck the trend and display a more balanced market where landlords have been able to secure material increases in rents, he added.
Aengaar says rents in affordable communities such as International City and Discovery Gardens have seen a modest fall in the first quarter.
Where rents are rising
Aengaar said there is a rise in nearly all villa communities areas across Dubai, particularly in upcoming areas such as Dubai Hills Estate and Wasl Gate. There is also a demand for rental properties in high-end and mid-end market apartments including DIFC, Downtown Dubai, Palm Jumeirah, Business Bay, and Dubai Marina/JBR.
Taimur Khan said there is a broad range of communities which have seen increases in rents, out significantly in District One, Emirates Hills, The Lakes, MBR City, Dubai Hills Estate and Jumeirah Golf Estates.
Edward Macura, partner at real estate consultancy Cushman & Wakefield Core, said waterfront and established villa communities such as Palm Jumeirah, Emirates Hills, The Springs, The Meadows and Arabian Ranches have witnessed a sustained uptick in rents over the first half of 2021. However, the outer areas of Jumeirah Villa Circle and villa communities in Dubailand continue to see some downward pressure in rents due to relatively higher levels of supply.
For most apartment districts, Macura sees tenant retention continuing to be a key focus.
“We expect greater tenant demand as the economy further improves on the back of strong government initiatives, however, the apartment rents are expected to recover at a slower pace,” he added.