DUBAI // Tenants in Dubai renewing their leases over the summer face demands for rent increases of up to 30 per cent.
Apartment rents have soared by 28 per cent year on year, and villas by 17 per cent. Sale prices have also increased, 38 per cent for apartments and 24 per cent for villas, according to a report from the property management company Asteco.
The average rent for a one-bedroom apartment in Discovery Gardens in the second quarter of this year was Dh50,000, a rise of 24 per cent compared with the same period last year. In Downtown Dubai the rate is Dh90,000, up 16 per cent.
International City has had the biggest increase in apartment rents, up by 27 per cent. The average rent for villas in The Springs has risen the most, with a 35 per cent increase to Dh160,000, but in Jumeirah Islands there has been a more modest increase of 10 per cent.
In the first half of this year there has been "no slowdown in transaction volumes, rental or sales growth while new project launches have become a weekly occurrence," said Asteco managing director John Stevens.
"We've seen similar trends over the past year. One of the things we will see now is people will be downsizing again and looking at potential change of location," said Matthew Green, head of research at the property services company CBRE.
"So people who are looking to move from the Palm Jumeirah are looking to the Marina, and Downtown to Business Bay.
"We have seen a lot of new activity in Dubai Land, Jumeirah Village Circle, areas that are as yet undeveloped. This is a trend we will see more and more over the next year."
Once of the main reasons demand for residential property has soared over the past couple of years is the influx of Arab expatriates from troubled countries in the region such as Syria, Egypt and Libya. The improved economic conditions in Dubai have also helped with sustaining population growth as employers begin to hire new talent. Companies are no longer consolidating or downsizing their office spaces.
"Development pipelines are a fraction of the size we've been used to in recent years," said Mr Green. "We saw 40,000 to 50,000 units handed over each year in 2007, now that sort of amount is spread over three years."
Dubai's property market consists of 417,900 apartments with only 31,400 more coming up by next year. There are 62,000 villas available with 6,500 coming up by next year, according to Asteco.
High-quality supply is also limited, which is pushing prices up.
"The population growth, lack of good-quality supply and a good economic marketplace are pushing prices up, and landlords are also becoming more bullish," said Mr Green.
Residents will now be under pressure to find an apartment within budget, without compromising too much on quality or location.
"I was paying Dh52,000 for a one-bedroom flat in JLT, but my landlord wanted the flat back for herself. So we looked at Discovery Gardens, but they were asking the same prices for JLT and Marina," said Suzanne Fenton, a PR manager in Dubai.
"In the end we found a flat in JLT for Dhs65,000. We were lucky to find it. Some of the one-beds were going for Dh70,000 and above."
thamid@thenational.ae
