Following six years of negative growth, Dubai’s prime rental prices increased by 5 percent in the first six months of 2021, driven by a 20 percent increase in rents in some of the city’s villa communities, according to research from real estate advisor Savills.
Out of the 30 cities in the Savills World Cities Index, the emirate – along with Miami and Moscow –recorded the highest levels of rental growth for the first half of the year.
Due to the vast array of development leading to a significant oversupply in the market, Dubai rental prices had been on a steady decline over the last six years, with 2020 recording the worst after a 12 percent drop in rents across the city - largely due to travel restrictions and the economic decline caused by coronavirus.
As the UAE recovers from the effects of the pandemic, however, the residential property market is rebounding with gusto and is likely to continue in that vein long term, despite potential short-term setbacks.
“Strong demand levels and limited availability across select submarkets led to an increase in asset pricing across a few micro-markets,” Swapnil Pillai, associate director research at Savills Middle East told Arabian Business.
“However, in the long run, prices are likely to gradually appreciate as economic activity gathers momentum and more job opportunities are created. The further easing up of travel restrictions will be a welcome catalyst for growth,” continued Pillai.
The overall results from the Savills World City Index report indicate an average increase of just 0.5 percent across the cities, and a 1.8 percent drop over 2020 due to global restrictions on travel reducing global demand.
This comes in as real estate advisor CBRE Group Inc. revealed that residential transactions in Dubai surged to the highest level since 2013 and average home prices rose 2.8 percent in in H1 2021.
Transaction volumes soared in the first half, surging 69.2 percent and 46.4 percent compared to the same periods in 2020 and 2019 respectively, CBRE said. The top end of Dubai’s housing market, mostly single family homes known as villas, saw a resurgence of demand and led the increase in average prices.