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Dubai's property rents and sale prices are expected to ease over the next few months, as tens of thousands of new residential units are expected to come on stream this year, according to a new analysis.
The real estate market, which has been on an upswing for months, could see close to 30,000 new homes and two million square feet of additional office space this year, property consultancy Asteco said.
Given the new supply, it is possible that landlords will offer competitive rates and incentives to avoid having empty apartments, while sales prices are less likely to continue rising as they have been for months.
“With more supply expected for handover in 2022, tenant retention will become increasingly important and can be achieved through competitive rates, incentives and proactive/professional property management,” Asteco said in its report released on Thursday.
“Sale price growth is likely to continue but ease in 2022, in line with increased supply and new project launches.”
Increases
Price movements are most certain to happen, although any increases in rent and sale prices would be in favour of properties in the premium category, as well as villa units.
“Rental rates across all major asset classes are expected to increase further for good quality properties, albeit at a lower rate,” said Asteco.
“Sale price growth is likely to continue but ease in 2022, in line with increased supply and new project launches. Villas will continue to be the predominant focus of demand and the limited number of new handovers in quality communities should translate into higher sales prices.”
2021 highlights
Around 17,000 apartments and villas were handed over last year, with developments such as Jumeirah Village Circle and Akoya Oxygen accounting for the bulk of the new supply. In the commercial segment, Dubai saw the handover of around 1.5 million square feet of new office space.
Apartment and villa rental rates registered annual increases of 10 percent and 24 percent, respectively. Office rental rates contracted by one per cent on an annual basis.
Expo 2020 has been cited as a major driver for real estate demand in Dubai. However, Asteco said the positive impact will not last very long.
“As expected, the start of the Expo 2020 has lifted real estate demand and rental rates. However, the currently perceived market sentiment is believed to be short-term considering the significant amount of upcoming supply,” said Asteco.
Since the start of Expo 2020 in Dubai last year, more than 23,000 residential property transactions, valued at more than 63 billion dirhams ($17.15 billion) have been recorded, according to Property Finder.
(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)
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