Dubai Records World’s Strongest Prime Rental Rise in Q1, 2014

Dubai’s leasing market has gone up significantly with the emirate recording the highest growth in prime rental values in the first quarter of 2014, according to a report by Knight Frank.

Prime rents in the city rose six per cent in Q1, and are up 16.4 per cent year-on-year, the report found.

On a yearly basis, the emirate came second to Nairobi, which saw a 25.8 per cent increase in its prime leasing market between March 2013 – March 2014.

“In Dubai, prime rents continue to outpace wage inflation. This is raising concerns about affordability and is leading domestic and expat buyers alike to consider purchasing a home,” stated the report.

However, purchasing a home has been hindered with the introduction of a mortgage cap and higher transfer fees by the Dubai government in 2013, it added. The measurements were implemented in an attempt to stabilise the emirate’s real estate market and to avoid a repeat of the property market crash of 2009.

A report by Asteco released in February attributed the spike in rents to continued unrest in the wider Arab region, Dubai’s successful Expo bid and an expanding economy.

Another report by CBRE found that the emirate’s residential rents grew by 22 per cent year-on-year in Q1 2014, with apartment rents surging 29 per cent, while villa rentals rose 15 per cent.

Around 65,000 new residential units are penned for completion over the next few years, stated CBRE.

“Dubai is becoming a more expensive place to live and we need to keep an eye on these pressures. There is some justification for this as we have seen GDP growth in the UAE and events like Expo have only accentuated that,” said Mat Green, head of research and consultancy at CBRE Middle East.

“But we need to keep an eye on where prices are going and where the cost of living is going. If Dubai starts to lose its competitiveness, then that can also have a knock on impact into other segments.”