Housing costs in Dubai continued their downtrend in the first three months of the year, with overall residential rents falling by an average of 11 percent compared to last year, data from real estate consultancy ValuStrat showed.
From January to March 2021, flats registered the sharpest fall in listed rents at 18.4 percent, although the cost of renting villas, which have gained popularity during the coronavirus pandemic, jumped by 3.9 percent.
Dubai’s property market had been subdued prior to the COVID-19 outbreak mainly due to a huge supply glut. Demand hit a further slump during the coronavirus lockdown, although sales transactions, primarily for ready-to-occupy units, have picked up since COVID-19 restrictions eased in the middle of last year.
Some analysts have forecast continued pressure on the residential market this year as more housing supply comes on to the market and the population growth still faces some hiccups. For this year, estimated upcoming supply currently stands at 46,316 apartments and 10,563 villas and townhouses.
Rental values, supply
When compared to the previous quarter, Dubai’s Q1 rents were “relatively stable,” ValuStrat said citing that the quarter-on-quarter decline was only less than one percent.
As of the first quarter of 2021, average annual rents for studio apartments stood at 35,000 dirhams ($9,500), while one-bed flats cost an average of 52,000 dirhams, while three-bedroom apartments cost 114,000 dirhams to rent.
Renting two-bed villas can set tenants back roughly 103,000 dirhams a year, while three-bed units would require a housing budget of 150,000 dirhams per year and four-bedroom properties, 212,000 dirhams.
The average occupancy of residential properties across Dubai was estimated to be around 80 percent.
Within the commercial segment, rental values for offices did not decline as much as residential properties, registering an annual decline of only 3.2 percent. Asking rents for offices during the first quarter were, however, 13.7 percent lower when compared to the rates two years ago.
The citywide median asking rent for a typical office size stood at 835 dirhams per square metre. Prices can vary depending on the location of the property.
In the Dubai International Financial Centre (DIFC), median asking rents stood at 1,650 dirhams per square metre for typically sized units between 93 square metres and 186 square metres.
Median asking rents in other locations are cheaper, with those in Business Bay averaging at 815 per square metre for typical office units measuring less than 93 square metres.
Across Dubai, office occupancy was estimated to be around 77 percent.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021