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Dubai rental rates expected to level out in next few years

Average rental rates for villas increased 11% over the last three months, but apartment rental rates grew just 4%, says the quarterly residential report from rental group Asteco.

People still have the money to rent in Dubai despite the global downturn and demand for villas and apartments continues unabated, said Andrew Chambers, Asteco managing director.

In some areas, such as Downtown Burj Dubai where prices increases 25%, prices are actually growing beyond the average because of lack of supply.

But the average rent for a three bedroom villa is now Dh305,000 per year, for a four bedroom villa it is Dh375,000 and for a five bedroom villa it is Dh465,000.

The slowdown in apartment rents is expected to continue as more projects near completion. Rent is very much dictated by demand, the report says. For example, the average rent of apartment in International city has increased by 13% but in Jumeirah Lakes Towers it is lower at 11% with around 15 residential towers to be delivered in the next three to six months.

Chambers said there is also a trend towards villas as more and more families seek accommodation. 'An increasing number of expatriates are discovering the benefits of villas and making a long term commitment to stay in Dubai due to the Emirate's reputation as a safe place for families,' said Chambers.

Overall Downtown Burj Dubai saw the highest increase with villa rents soaring 61%. Palm Jumeirah saw a 42% increase, Palm Jebel Ali a 39% rise and Emirate Hills was up 35%.

Looking ahead the company is predicting a levelling of prices in some areas and a slowing in others. Chambers said he did not expect any major increases in the next couple of years.