Surge in Leasing Charges for Dubai Property

The current property boom in Dubai has sent rental charges rising upwards since the year 2002, at an average 37% increase according to The Dubai Municipality. The higher cost of living, unregulated rental increases and average 1.5% salary increase in the private sector, according to a study done by GulfTalent.com, has put a lot of pressure on Dubai’s tenants. To alleviate some of that pressure, the Government of Dubai moved to impose a rental cap of 15% in October 2005.
Considering the rapid increase in Dubai’s population that has swelled from approximately 800,000 in the year 2000 to 1.3 million in 2006, where it stands today, there is a shortage of residential apartments and villas for rent. This excess demand over supply has led to higher rental charges because property continues to be in short supply.
Despite the current shortage, the future of Dubai property remains extremely bright. Over the next three years an additional 84,000 accommodation units are expected to be ready for occupancy as new projects are completed. The addition of these properties is expected to help stabilize the marketplace for rents.
Investors who have put their Dubai properties out for rent yield an average of 8-9 percent on their property at the current market rate. Deemed a good investment, several new comers and existing residents in the city are seeing the benefits of buying their own accommodations, instead of renting.

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Dubai Real Estate

By: Michael Aston

Much has been said about the phenomenal growth experienced over the past few years in the Dubai real estate market. Most that arrive in Dubai pontificate as to why the market does not operate on traditional real estate fundamentals and how it must be then set for a bust.
Contrarians seem to focus on the uniqueness of the Dubai market and stress the out of the box components such as population growth that is 3-4 times that of other developing cities around the world. Additionally the high yields achieved by investors presently 6-7% for long-term rentals and 12-15% for short-term rentals seem to justify the further capital appreciation in the market to reach the traditional lower yields achieved in more mature markets.
Is Dubai still a comparatively good value versus other markets? Let's take Singapore as an example. The average villa price per sq ft in Singapore is 1,050 AED and the average price for apartments is 1,350 AED per sq ft. Both Villas & Apartments in Dubai are on an average 10-30% below those #'s and be a similar regional hub would point to further potential appreciation in Dubai.
Another component driving Dubai real estate is high hotel prices and huge corporate and holiday rental demand for shortstay or short-term rental options. Many Dubai investors are finding that shortstay renting produces much higher than average returns and given average hotel rates of $232 US per night the demand is pushed to find alternatives.
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