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For investors it still makes sense to invest in Dubai’s luxury properties, with the city recording the second-highest increase in rental value gains for its high-end units after Tokyo for 2014. Over a 12 month period ending December last, rentals were up by an average 8.1 per cent, according to a Knight Frank, which also found that Tokyo’s gains were around 11.1 per cent.
Zurich was in third place with a year-on-year gain of 6.9 per cent.
Interestingly, the Knight Frank report also indicates that the bulk of the 8.1 per cent increase in Dubai took place during the first six months, while the second half was relatively subdued.
“Outside [of] the oil industry tenant demand has proved robust,” said Kate Everett-Allen, partner for Residential Research at Knight Frank.
The scenario played out elsewhere, placing the Middle East at the top worldwide.
By the looks of it, rentals for luxury property in Dubai seems impervious to any downward pressure. For that matter, the city’s tenants would say such is the case with all of Dubai’s rental market - high and low.
“A luxury villa on the Palm can fetch upwards of Dh1.2 million per annum [in rent],” said Luke Hexter of Luxhabitat. “We have seen rents at Dubai Marina up by roughly 10 per cent since last year, while on the Palm [they] have stayed more or less stable.
“Luxury two-bedroom apartments on the Palm can fetch upwards of Dh350,000 annually, while two-bed [apartments] in Dubai Marina would be Dh250,000 yearly.”
Price of exclusivity
According to Gregory Lewis, head of Dubai Prime Residential Sales at Knight Frank Dubai, “Exclusivity comes at a price... out of a random sample of 40 penthouse apartments currently for sale in Dubai, the average price is Dh22.8 million.
“Clearly, location, size, specification and amenities will influence just how much you pay for your pad in the sky and some are considerably higher in price than this figure,” he said. “But if your dreams involve a home at the top of the world, it will be a price worth paying for.”
Developers continue to test that appetite for high living - the Al Barari community will see the launch of four-bedroom villas with prices from Dh7.7 million in ‘The Nest’ cluster from April 11. Ranging between 9,000 to 15,000 square feet, there will only be 99 of these units on offer.
Culture Village, located off the Business Bay Bridge, is another development aiming for the luxury’s investors’ spotlight, having come back into spotlight since 2014 with the launch of new projects. Perceived as the centre of the city, it appeals to both expatriates and locals alike. The area is being touted as cultural hotspot of the city with museums, as well as high-end residential and retail options. Hospitality projects have also favoured the area due to its strategic location, with a new Anantara hotel planned for 2018 opening.
“Currently, flagship projects such as [the] Palazzo Versace [average price of Dh1,900-Dh3,000 a square foot] and D1 tower [Dh1,850-Dh2,200 per square foot] are ready and to be handed over,” said Robin Teh, country manager at Chestertons Mena.
“There has been delayed progress with other projects. Infrastructure works have also progressed slowly and access to the project remains restricted. We anticipate most of the demand would be targeted towards flagship projects in the short-term. Off-plan projects would see more interest as market improves.”
Source: Manoj Nair, Associate Editor, gulfnews.com