Residential rents in Dubai rose 17 percent on average amid population growth and limited supply in certain areas, according to CBRE Group Inc.
“Dubai is seeing higher rental growth this year due to a sustained period of population growth, positive economic performance, increased occupier demand and limited availability of quality units in the most desirable locations,” Matthew Green, head of United Arab Emirates’ research at CBRE Middle East, wrote in a report today.
Dubai, which witnessed one of the world’s worst property crashes with 65 percent drop in home values from its 2008 peak, is returning to large projects which dominated the market. The Persian Gulf business hub, which is home to the world’s tallest tower and man-made islands, last month announced plans to develop a new district with the world’s largest mall, 100 hotels and gardens larger than London’s Hyde Park. Just days after the Mohammad Bin Rashid City was announced, the sheikhdom said it would build five theme parks for $2.7 billion.
About 36,000 apartments and single-family homes maybe completed from 2013 to 2015 provided construction delays are minimal, according to CBRE. The majority of residential supply is expected from locations such as Dubailand, while about 26 percent of it will be in Motor City, Dubai Sports City, Liwan and Dubailand Residences, it said.
“With supply levels becoming increasingly tight in popular community areas, further product launches are anticipated during 2013,” according to Green. Although investor confidence is growing, “the main focus for investors remains completed assets in established locations,” he wrote.