Dubai’s rental market continued to show upward trajectory in the third quarter of 2021, but the trend could be short-lived as thousands of new residential units are expected to come on stream before the end of the year, according to a new analysis.
Rents for apartments and villas across the emirate posted quarterly increases of 3 percent and 6 percent, respectively, however, the values are still significantly lower than the levels seen in 2014, real estate consultancy Asteco said in its latest report.
The market is expected to see 8,000 new apartments and 1,300 villas before the end of the year. The supply will be added to the 12,175 new flats and 1,600 villas that were completed between January and September.
Dubai's property supply>
Dubai’s property market has seen an uptick in demand since the lifting of COVID-19 restrictions in 2020, with buyers snapping up residential units to take advantage of low prices and attractive interest rates. The Expo 2020 event has also fueled growth in the demand from both tenants and investors.
“As expected, the start of the Expo 2020 has lifted real estate demand and rental rates. However, the currently perceived positive market sentiment is believed to be short-term considering the significant amount of upcoming supply,” Asteco said.
“Based on recent construction progress and developer announcements… another 9,300 apartments and villas [will be handed over] by year end, with the majority of this supply being attributed to the Azizi Riviera development,” it said.
As for sales prices, Asteco expects the momentum of growth to continue towards the end of the year and into 2022, underpinned by Expo 2020, vaccination campaign and visa initiatives.
Sales prices jumped in the third quarter of the year, with villa properties showing significant quarterly and annual increases of 9 percent and 37 percent.
“Government initiatives in terms of new visa programmes and regulations to attract foreign investment, the easing of COVID-19 restrictions and the successful rollout of the vaccines are expected to boost the economy,” the report said.
During the last week of November, Dubai recorded real estate transactions worth 3.2 billion dirhams ($871 million), according to the Dubai Land Department.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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