Strong demand pushes prices and rents up in Dubai

Strong demand pushes prices and rents up in Dubai

Dubai real estate market has recovered at a phenomenal speed. Although sale and rental prices of property had begun rising in 2012 but the price hikes were limited to handful areas. In 2013 however, that recovery has been more widespread where there are palpable signs of a more profound recovery.

During Q1 2013, Dubai rental sector recorded an overall spike of 1%. This one percent is not a flattering number but during the past five years, it is the first time the rental market of Dubai has shown signs of an overall recovery. In 2012, there were several areas in which prices were increasing but that recovery was patchy, unlike the recovery of today. During the first quarter 2013, villas and apartments in Palm Jumeirah, Downtown Dubai, JLT and other localities have recorded impressive hikes in both sale and rental prices. As an example Downtown Dubai apartments recorded a 2.16 % increase in their rental prices during the first quarter of 2013.

Dubai Marina, which is the recipient of most of the supply of new units, recorded a minute fall of 0.8% in rental prices which could be because of the steady supply, giving the buyers more options to choose from. Interestingly, there are plenty of affordable developments in Dubai which now offer high quality of living without even costing too much. Jumeirah Lake Towers which even though is regarded as the poor cousin of Dubai Marina because of the lack of fancy eat-outs in the area has also been performing well. Communities like JLT could be one of the possible reasons why apartment rents in Dubai Marina fell.

Rents in Abu Dhabi however have continued to fall for the most part. Right now Abu Dhabi is going through the same phase Dubai did some twelve months ago where the market became polarized. There are areas in Abu Dhabi where property prices and rents have continued to fall while on the other hand, high-end communities like Al Reem Island, Al Raha Beach, Khalifa City A have recorded hikes in both rental and sale prices.

Abu Dhabi government has announced an array of large scale projects in hopes of boosting investors’ confidence. This is a wise move on their part and will help build a general sense of optimism in the market in the long run. Right now, low demand and oversupply is putting a downward pressure on property prices. UAE property analysts at Bayut.com believe that although rental and sale prices in Abu Dhabi fell during the first quarter of 2013 but the government can curb this issue by controlling the supply of units.