What was the general market movement in Dubai in the third quarter?
Up and up and up — as it has been throughout the year.
Average apartment and villa rental rates continued their upward trajectory in the third quarter with 4 per cent and 5 per cent rises, respectively, property consultancy Asteco has said.
On an annual basis, average villa rents were up 22 per cent while average apartment rents rose 15 per cent during the 12-month period, it said.
This has led to a rise in rental disputes and eviction notices as landlords seek to make the most of the market conditions.
“Whilst some tenants tend to use the Rera Rental Calculator to negotiate rents, others are willing to pay increases above the rental rates stipulated by Rera to avoid a dispute and the potential of incurring moving costs and ultimately paying higher rental rates for new lease agreements,” Asteco said in its third-quarter report.
Rental rates are expected to “remain elevated” towards the end of the year and in 2023, but growth is expected to slow amid an oversupply, it said.
Dubai's property market rebound has picked up pace this year as its economy continues to make a strong recovery from pandemic-driven headwinds.
The emirate's economy grew by 6.2 per cent in 2021, according to preliminary data from the Dubai Statistics Centre. In the first three months of this year, Dubai's gross domestic product expanded 5.9 per cent, according to government data.
It found one-cheque payments rose by 8 per cent compared with last year. Paying with one cheque is the most popular way to secure rent for the year, making up 32 per cent of transactions.
Meanwhile, total transactions from January to September in 2021 versus January to September in 2022 rose 71 per cent year on year, according to broker Allsopp & Allsopp.
And ValuStrat put the rental rate growth at 25.3 per cent annually, with a quarterly rise of 7.8 per cent.
It said average annual rents for two-bedroom villas stood at Dh141,000 ($38,393), three-beds at Dh210,400 and four-bedroom villas at Dh278,500.
Where were the biggest rises in Dubai?
Similar to the dramatic price increases witnessed in the prime sales market, rents in prime areas also increased significantly.
Apartments in The Palm Jumeirah and Downtown Dubai had annual rises of 22 per cent and 24 per cent, respectively, while in the villa segment, The Palm recorded a 32 per cent rise and Dubai Hills a 33 per cent increase, according to Asteco.
Prime residential values in Dubai, which encompass The Palm, Emirates Hills and Jumeirah Bay, have risen by 89 per cent in the past 12 months, Knight Frank said, amid an influx of ultra-high-net-worth individuals and lack of prime supply.
What about supply of units?
Total estimated completions as of the third quarter stood at 16,063 apartments and 3,471 villas, according to ValuStrat. It said this was equivalent to 40 per cent of preliminary estimates for the whole year.
Notable apartment completions were Creek Views at Creek Beach Al Jadaf with 634 units, The Grand Dubai Creek Harbour with 559 properties and Sol Apartments Dubai Production City with 235 units.
Newly built villas were completed in Akoya Oxygen Aquilegia, Avencia 2 and Odora, totalling 1,156 properties.
Based on developer schedules 21,720 apartments remain under construction, with 57 per cent being located in Mohammed bin Rashid City, Jumeirah Village Circle and Downtown Dubai, ValuStrat said.
Meanwhile, Asteco said there has also been a renewed surge in construction activity for previously stalled projects as developers are looking to capitalise from the current buoyant conditions.
The third quarter of 2022 “recorded a steady slew of new project launches and handovers, supported by strong transactional activity [for off-plan and completed properties] across all asset classes”, it said.
Asteco projects a further 7,650 apartments will be built in the fourth quarter, along with 1,000 villas.