Rents increase about 10% in Dubai’s non-freehold areas
OLDER APARTMENT BUILDINGS IN BUR DUBAI, KARAMA WITNESS HIGH DEMAND
Rents in Dubai’s nonfreehold residential districts such as Bur Dubai and Karama have started to rise sharply as demand spills over from the city’s popular freehold locations. The demand is such that even older buildings in these areas have seen landlords raise their rental demands — and getting tenants on those terms.
Until now, older properties were lagging by some distance when it came to how much landlords could hike their asking rates. That gap has by the close of the year narrowed significantly. There are clear reasons as to why this is happening.
“Older buildings have increased prices, mainly because they generally have larger apartments than newer ones,” said Avinash Uttamchandani, Sales Manager of Rocky Real Estate, who adds that the rental market in Dubai is facing a situation where there is heightened demand but not enough of the supply to accommodate that.
This is why areas such as Bur Dubai, Karama, Mankhool and Satwa have recorded, rent gains of a ‘minimum of 5-10 per cent’.
Although rent gains are across the board in these neighbourhoods, Uttamchandani said, “It is more so for threebedroom apartments and premium buildings, where we have seen increases over 20 per cent in some cases as tenants are looking for larger apartments.”
Spillover effect
It can’t be any other way going by the rental action in Dubai Marina or Downtown Dubai, for instance.
In Dubai Marina, compared to earlier annual rental contracts, there are now increases of not less than 20 per cent compared with last quarter, and in some cases by over 30 per cent, according to Mauro Marchetti, Client Advisor for Dubai Marina at Powerhouse Real Estate.
“There is no distinction between 1-, 2- or 3-bedroom properties,” said Marchetti, which has seen one one-bedroom apartment leasing at around Dh100,000, a two-bedroom for Dh150,000 and a three-bed at around Dh220,000 on average.
Rental trends at some of Dubai’s happening locations:
Business Bay
The high-rise cluster recorded ‘one of the highest increases in rental rates’ in 2022. Most of the new rental contracts could command a much higher rate, which then added pressure on existing contracts.
Downtown Dubai
The Downtown had the highest rental rate increase in the past year, with three-bedroom units signing off on a whopping 25 per cent rise.
Greens
One-bedroom units have seen sizeable rent increases.
JLT
As at the Greens, JLT has recorded the highest rental gains for its one-bedroom units, with demand sparked by the connectivity offered through the two metro stations.
JVC
One of Dubai’s mid-market neighbourhoods, the rental growth has been driven primarily by renewals.
Motor City
Until lately, this community has had the lowest increase in rental rates.
Dubai’s non-freehold areas
Rents in Dubai’s popular rental neighbourhoods in Bur Dubai, Karama and Mankhool have one-bedroom units between Dh35,000-Dh50,000 in Q2-2022 and rising to Dh40,000-Dh65,000 in Q42022.
Two-bedroom apartments were Dh45,000-Dh65,000 in Q2-22 and rose to Dh50,000Dh80,000 in the fourth quarter, while three-bedrooms were averaging Dh60,000Dh95,000 in Q2 and are now at Dh75,000-Dh135,000.