The cost of renting an apartment in Dubai increased six percent in the second quarter of the year, compared to the previous quarter, while average villa rates rose nine percent, research from property consultants Asteco showed.
The firm’s quarterly report showed that sale prices for villas in well-located areas swelled as much as 16 percent with prices rising on average between six and eight percent as the emirate’s battered residential market started to show some signs of a recovery.
“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,” Elaine Jones, CEO of Asteco, said in a statement.
Rental rates for apartments in Dubai Marina and Downtown Dubai increased ten percent during the second quarter compared with the first, with the average two-bedroom apartment going for around AED90,000 (US$24,500) to AED120,000 per annum.
Rents in well-heeled districts Mirdiff and Arabian Ranches inflated by 13 percent and 11 percent, respectively, said Asteco.
“Tenants are relocating in search of value-for-money, one-and two-bedroom apartments as well as three and four-bedroom villas are the preferred unit types. In terms of rates, quality well managed developments, will continue to set the pace,” said Jones.
Dubai’s property sector was hit hard by the downturn, with billions of dollars worth of projects put on hold or cancelled, while property prices slumped as much as 60 percent. Property prices in well-located areas are starting to show some signs of recovery.
Nakheel Properties, the developer behind the palm-shaped islands, in April posted a 30 percent rise in earnings in 2011 and forecast a recovery in the emirate’s real estate market this year.
Dubai-based Emaar Properties reported a 44 percent rise in first-quarter profit in May, beating analysts’ forecasts.
Property prices increased in Dubai Marina, the Palm Jumeirah and Downtown in the second quarter with villas on the Palm Jumeirah now the most expensive in the emirate at AED17,200 per sq m, said Asteco.
The cost of a one and two-bedroom apartment in Downtown increased nine percent compared to eight percent for property in Dubai Marina and Palm Jumeirah. Villas in Emaar’s Arabian Ranches saw the largest increase with prices rising 16 percent while the cost of buying an apartment “remained relatively stable,” noted the report.
“Looking ahead to the 2012 year end, sales prices will continue to rise for quality developments, especially villas. The number of owner-occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue. Further demand will also be evident from overseas buyers escaping economic woes in the euro zone and political instability in other parts of the region,” said Jones.
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