The property market in Dubai is witnessing strong rental growth mainly in emerging masterplan locations as corporate occupiers continued to seek out high quality offerings across the emirate, said a report.
The emergence of strong demand has accelerated rental growth in the Central Business District (CBD) area with the average rates now Dh1,615/sq m/annum, representing an increase of around 7 per cent quarter-on-quarter, according to the latest Dubai MarketView by CBRE, the leading international real estate consultancy.
The third quarter witnessed strong leasing activity, despite being a traditionally quiet period for the real estate market.
Rental growth was recorded across all key sub-markets as corporate occupiers continued to seek out high quality offerings in established office locations, the report stated.
According to CBRE, the residential market in Dubai remains firmly set on an upward track led by the villa sector which has registered a 19 per cent year-on-year growth in its rental rates.
The apartment sector witnesses highest increase with a 4.5 per cent growth quarter-on-quarter, it added.
Mat Green, the head of Research & Consultancy, UAE, CBRE Middle East, said: “As new supply has been delivered, demand for offices in many ageing properties has waned, driven by the widespread migration of tenants towards better quality assets. This trend has also resulted in a growing divergence in performance between the top and bottom of the market.”
“Despite the high headline vacancy rate across the market as a whole, the availability of good quality office accommodation over contiguous floors is somewhat limited. This is likely to lead to further rises in rental values over the next 12 months as landlords seek to achieve premiums on remaining space spaces as occupancy levels near capacity,” he noted.
For now, this trend will remain largely building specific, with premium products in the more attractive office locations garnering the majority of occupier interest,” added Mat Green.
According to the CBRE MarketView, as availability shrinks further, there is likely to be spill over of demand in secondary locations.
Secondary office property locations are experiencing a marginal strengthening of performance with rising rental and occupancy rates despite the entry of new office stock, said the market review.
Secondary office rents (excluding Tecom A& B) are currently averaging Dh955/sq m/annum, representing an increase of 3 per cent quarter-on-quarter, it added.
The residential market witnessed sustained growth being achieved across both rentals and sales segments. Sales activity remains robust, with a total of 5,175 residential properties transacted during the quarter with a total value of Dh11.15 billion.
This figure is marginally lower than the previous quarter, but is significantly higher in both numeric and value terms over the same period last year.