ValuStrat, a leading consultancy firm in the Middle East, released real estate market reports for the first quarter of 2021, which ascertained that Dubai residents have experienced an 11% drop in year-on-year rental prices. However, the company has reported that the declining percentage figure is reflective of heightened competition in the market; when compared to the previous quarter, residential rent prices demonstrated a decline smaller than 1% within the January-March 2021 period, showcasing an increasingly steady market.
As leading property development companies across the country share projects, which amount to a significant introduction of new properties throughout the year, industry experts believe that rental prices will continue to stabilise post-pandemic rather than a spike. According to the founder of Danube Group, Rizwan Sajan, the country’s highly anticipated Expo 2021 is also not likely to spur elevated rent prices; however, the global event could be the catalyst for heightened market sentiment, which will drive international interest.
The United Arab Emirates is expecting over 25 million attendees and has optimised every avenue to reach this goal, both in-person and online. Visitors of Expo 2021 and residents of the country will witness the introduction of COVID passports to maintain safety protocols, as well as innovative online channels to attend the event remotely. Haider Tuaima, head of Real Estate Research at ValuStrat anticipates that this substantial inflow of tourists will potentially increase rent in highly-coveted locations only.
The ValuStrat report demonstrated that residential capital values this year dropped by 10.9% in comparison to the same quarter a year earlier, but that the gradual progress achieved is promising. The ValuStrat Price Index recorded improvements in capital value ranging from 1.8% to 5.4% throughout every freehold villa area it oversees. The locations that achieved the highest VPIs were Palm Jumeirah, The Meadows, Arabian Ranches, The Lakes and International City. When considering annual performance, however, neighbourhoods across Dubai experienced a decline in value at varying degrees.
The company’s Managing Director, Declan King states that “improved buyer confidence appears evident in many parts of the Dubai residential market, with statistics showing increased numbers of sales transactions and price rises. Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more sought-after apartment locations too.” King expresses that, in addition to the effects of Covid-19 on living requirements, an explanation for the increasingly competitive market is that buyers are under the impression that properties are listed below their true market value and purchasing now allows them to benefit from a better price.
When compared to the last quarter of 2020, office ticket sizes have lowered by 21.7%, though they amount to 16.2% higher than one year prior. Nonetheless, ValuStrat recorded that office sales transaction climbed by 41% on a quarter-on-quarter basis, and by 45.7% on a year-on-year basis.
According to the report, Dubai’s residential occupancy stood at approximately 80% during the first quarter of the year, while the average rent was listed at 55,000 AED for apartments and 211,485 AED for villas. On average, the yearly rent cost for a two-bedroom apartment was recorded as 78,000 AED and 114,000 AED for a three-bedroom apartment, while the rent for villas amounted to approximately 103,000 AED for a two-bedroom, 150,000 AED for a three-bedroom and 212,000 AED for a four-bedroom. ValuStrat evaluated that the average rental price across the city was recorded as 76,910 AED during the first quarter of 2021.
