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CBRE Group, a real estate investment company, said average residential property prices in Dubai rose 4.4% in the 12 months ending in August, the largest annual increase since February 2015.
But a steady drop in rents indicates continued weakness in the industry, which has been struggling for a long time. CBRE said rents in Dubai continued their downward trend, down 2.7% on average over the year through August.
Reuters reported in March that the luxury sector in Dubai’s real estate market had seen a boost after a sharp decline caused by the COVID-19 pandemic, but the sector’s recovery is still far away.
CBRE data showed that market trends continue to tilt in favor of villas over apartments and prices remain below historic highs.
While apartment prices rose 2.5% and villa prices rose 17.9% in the twelve months ending August, they were still 30.4% and 20.5% lower. , respectively, compared to their 2014 highs.
Apartment rents fell 5.2% year-on-year in August, while average villa rents rose 15.5%, the highest growth rate recorded for the industry.
The office market saw an increase in occupancy rate, as it increased by 28.8% in the third quarter of this year compared to 77.1% in the previous quarter. At the same time, average rents for premium grades and grades 1 to 3 fell between 4.1% and 6.5% year-on-year in the third quarter.
CBRE said the price pressure was coming from new entrants, such as international and local technology companies, and Chinese technology and financial companies. The demand for these businesses tends to be high end offices and first class offices.
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