Dubai rental market is likely to sustain an upward price trend in near term future as Expo 2020 has generated property demand especially in areas with close proximity of the mega event, according to a report.
“The Dubai real estate sector has witnessed an upward trend in the rental market during the third quarter of this year with an estimated 14 per cent increase in affordable housing and up to 30 per cent surge in luxury housing in selected areas of the emirate. The fourth quarter is expected to follow suit with the commencement of Expo 2020 Dubai,” according to Zoom Property Insights.
The first 10 days of the marquee event recorded 411,768 visitors, and it is expected to welcome up to 25 million visitors from different countries throughout its six-month run. From these figures, it can be ascertained that the areas located close to the event site will remain busy during this world fair. There is an expected growth both in terms of rental prices and demand in these areas.
Ata Shobeiry, CEO at Zoom Property, said the promising statistics in second and third quarters of 2021 paved the way for a strong fourth quarter.
“Due to the ongoing Expo and a strong comeback by the Dubai property market post-pandemic setback, rental prices will see a significant increase in the last quarter,” Shobeiry said.
Dubai property market quarterly reports from different property portals show that the July-September saw an increased activity in Jumeirah Village Circle (JVC), Al Nahda, Bur Dubai, Dubai Silicon Oasis and Deira for affordable flats, while tenants seeking luxury apartments for rent preferred Dubai Marina, Downtown Dubai, Jumeirah Beach Residence (JBR), Palm Jumeirah, and City Walk.
Mirdif, Damac Hills 2, JVC, Reem and Dubai South topped the charts for affordable rental villas. For luxury villas, Jumeirah, Al Barsha, Umm Suqeim, Arabian Ranches and Dubai Hills Estate remained the top pick of tenants. As per Zoom Property Insights, these areas will remain at the forefront in October-December quarter as well.
“While we expect residential rents in Dubai to continue improving over fourth quarter and in 2022, it is important to note that rental recovery is expected to be segmented. Villa districts and most of the prime apartment locations are expected to see a faster pace of recovery while most affordable and outer apartment districts with ample existing stock are expected to see slower stablisation rates,” Edward Macura, partner at real estate consultancy Core, told Khaleej Times on Sunday.
Furthermore, he said most rental rises are in the new-let market as landlords have been able to list and rent at higher rents, however, “we haven’t witnessed similar levels of rental escalations in lease renewals” due to the cap on rental increases governed by the Rera Rental Index.
Shailesh Dash, a Dubai-based financier and entrepreneur, said Dubai’s economy and its Real Estate sector both have been in an upswing since early this year.
“Build up to Expo has been very good for the Dubai economy with the way the government has managed the pandemic and has adopted very positive regulations to help in the growth of businesses in Dubai,” Dash told Khaleej Times.
Currently, he said the demand for certain class of real estate seems to be more than the supply which has resulted in the upswing for real estate prices and rentals as well.
“We believe the work done in creating a more investor-friendly environmnent will help the economy even beyond the Expo,” Dash said.
Atik Munshi, managing partner, FinExpertiza UAE, said Dubai and other UAE emirates have seen a steady increase in real estate prices, particularly of high-end property during the last year and a half.
“This trend is expected to percolate to mid-range and affordable properties too. With increase in property prices, the rentals thereof would also witness increase,” he said.
He said the Dubai REST app from the Dubai government is an easy way to find if the rental in any area in Dubai has increased.
“Expo 2020 is already drawing a huge number of people — more visitors from the subcontinent and Europe are expected in the next two quarters. With the UAE economy showing a positive growth; the businesses in UAE are likely to hire more people and thus the outcome would be the need for more housing; which in turn would push the rentals higher. I won't be surprised if the rental market sees a further increase in the next year too,” Munshi told Khaleej Times on Sunday.
The shift of demand towards large homes, return of foreign investors to Dubai, and expatriate-friendly policies are the major reasons accredited to increase in demand and property prices, apart from the ongoing Expo 2020, according to Zoom Property Insights .
The recently announced golden visa scheme and 100 per cent business ownership policies have also resulted in increased entrepreneurial and investment activities in Dubai. The change due to these policies is reflecting in the rental property market, as both the demand and prices are witnessing substantial growth this year so far, it added.
Apart from the rental market, property sales are also speculated to witness a surge in Q4, as the third quarter showed promising results. With 15,926 deals worth Dh42.35 billion, it has become the best ever third quarter vis-à-vis transaction value in the history of the Dubai property market.