Dubai’s rents have been on a steady decline over the last six years, but the property market hit a major slump last year when the lockdown and restrictions were rolled out to curb the spread of COVID-19. High jobless rate also contributed to falling demand.
However, real estate transactions have shown that demand is rising, with the high-end market generating huge interest. According to a report by Property Monitor, gross rental yields also started to recover and were back above 6 percent in July. Property prices during the month also went up by 1.9 percent compared to the previous month.
Swapnil Pillai, associate director for research at Savills Middle East, noted that rental markets are likely to remain stable for the rest of the year, although tight controls in certain markets are causing rental rates to recover slowly than capital values.
“However, in the long run, prices are likely to gradually appreciate as economic activity gathers momentum and more job opportunities are created,” he said.
In its World Cities Index, Savills reviewed the rents in 30 key cities around the world to check out where the highest increases are. Miami posted the highest jump in rents, at over 8 percent, followed by Moscow (6 percent).
However, across the 30 markets monitored for the study, the overall rent increase averaged just 0.5 percent during the first half of the year, registering a 1.8 percent decline over 2020.
“Though rents seem to have stopped falling, the level of rental growth remains significantly lower than capital value growth in the World Cities Index, which grew at an average rate of 3.9 percent over the six months to June 2021, the fastest rate since December 2016,” Savills said in its report.
The average prime residential yield across the 30 cities stands at 2.9 percent in June 2021 compared to 3.1 percent in December 2020. The average yield is the lowest since the real estate consultancy began tracking the data in 2005.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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