Property prices in Dubai surge but rents slump

CBRE Group, a real estate investment firm, announced on Thursday that average residential property prices in Dubai rose 4.4% in the year to August, the highest annual increase since February 2015. However, a continued drop in rents signalled that the long-struggling sector would continue to struggle. According to CBRE, Dubai rents continued to fall in the year ending in August, falling by 2.7% on average. The luxury segment of Dubai's property market has seen a boost following a sharp downturn caused by Covid-19, according to Reuters, but recovery is still a long way off. The United Arab Emirates' long-term economic trend had been sluggish since the 2014 to 2015 oil price crash, even before the pandemic. For years, supply has outpaced demand for new houses and apartments in a market dominated by foreigners, many of whom left during the pandemic. According to CBRE data, the market continues to favour villas over apartments, with prices remaining well below historic highs. While apartment prices rose 2.5% and villa prices rose 17.9% in the year to August, they were still 30.4% and 20.5% below their 2014 highs. In August, average apartment rents fell by 5.2% year over year, while average villa rents rose by 15.5%, the highest growth rate on record for the segment. The occupancy rate in the office market has increased, rising to 28.8% in the third quarter of this year from 77.1% the previous quarter. In the third quarter, average rents in the prime and Grades A to C categories fell between 4.1% and 6.5% year over year. New entrants, such as international and local technology firms, fintech firms, and Chinese companies, have put downward pressure on prices, according to CBRE. Prime and Grade A offices are in high demand from them. Image Source Also read: Maharashtra property registration revenue at Rs 7,507 cr in Q2