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The upward pressure on Dubai?s residential rents continues to mount even as new homes are getting delivered in higher numbers ? in the first three months of this year, rentals were up by 7 per cent over the fourth quarter of 2013. On a year-on-year basis, Dubai?s tenants may have seen a 23 per cent increase on average in what they are paying to their landlords, according to an update put out by consultant JLL.
Apartment rentals ? and the most worrying for the vast majority of the city?s tenant base ? recorded a 26 per cent annual gain, while those for villas were slightly muted at 12 per cent. The JLL forecasts, however, suggest that the pace of rental increase might be slowing down.
If it has to slow down appreciably, more of the immediate property supply needs to get into the hands of end-users. In the first quarter, around 1,800 units were handed over in the city and a further 24,000 are expected for the full year, based on JLL estimates.
In all, 39,000 homes are to be delivered in the next two years, which would be a 9 per cent increase over the existing total stock of 365,000 units in Dubai. The question would then be whether this represents a sufficiently large base to keep medium-term rental increases in some sort of check.