May 21, 2012
Since 2010, the clear signs of stabilization have been recording in the sales prices of Dubai villas. This is for the first time in three years that their lease rates have marked a significant increase in Q1 of 2012. According to a report, average rental rates for villas have inched up by 3% quarter-on-quarter whereas lease rates have declined by 1% year-on-year. This clearly shows that the rate of decline in villa rental rates has slowed down significantly and the rates have finally set their foot towards the path of recovery.
The highest increase of 5% has been recorded in the rental rates of villas having 2 bedrooms whereas the increase of 3% has been noticed in the villas having five or six bedroom. Moreover, the quality villas in the prime locations have high rents as compared to the villas in secondary locations. For instance, villas in palm Jumeirah, Springs. Arabian ranches and Emirates Living have marked significant increase in rentals whereas villas in Dubai Silicon Oasis, Jumeirah Village, International Media Production Zone, Dubai Investment Park are still facing rental declines due to lack of quality infrastructure.
In the prime areas, villa lease rates have started to get back on their original track due to limited supply of new units being added in these areas, high quality of life and more demand. In the next one year, additional supply of new villas has been scheduled to add to Dubai real estate market which would further expand the villa inventory mainly in Al Furjan, Jumeirah Golf and Jumeirah Park. This new supply can give rise to a term ‘Selective Stabilization’ in the villas rental market, since prime areas would show lease rate increases while other areas like International City, Silicon Oasis Dubai etc would continue their declining trend. If the new supply adds in stages, this problem can be eliminated to a significant extent.
This is for the first time that there is something to cheer about Dubai villa lease rates and this shows that the market is slowly moving back to its original position. But for consistent and uniform recovery of the Dubai real estate, apartments market must also overcome its pressure and set its foot towards the path of recovery.
Source: www.realestatedubaiblog.com
