Dubai is a city of change and this is evident by the skyline where new projects and construction infrastructures are being developed constantly. All these developments go a long way in enhancing the aesthetic value and marketing of the city and are very crucial in determining the course of the real estate especially the rental business of the city. Therefore, for Vardhman Realty, it is essential to decipher this interdependency between development and rental in order to help clients navigate the market.
One of the most direct impacts of new developments on rental prices is the increase in demand they create. Since new residential towers, commercial complexes or mixed-use buildings are being developed, they receive an influx of residents or business establishments. Areas that were once considered peripheral can become prime locations almost overnight, leading to a surge in rental demand. For instance, areas such as Dubai Creek Harbour and Jumeirah Village Circle have recorded a tremendous rise in rental charges due to improved standards and extended infrastructure in the region.
New establishments also have the potential to change the nature of a neighborhood, thus making it desirable to more people. Luxury homes, hotels, and malls can create an image of an affluent neighborhood, which can increase the rent levels of the neighborhood. For instance, the creation of City Walk led to the commercialization of parts of the Al Wasl area to suit this new urban neo lifestyle hence commercial rents went up.
Availability of proper social amenities for instance roads/metro lines and other public transport facilities, go a long way in setting rental costs. Accessibility and connectivity enhance the convenience of some areas within cities to the residents, thereby increasing demand and hence the rent for the areas. The expansion of the Dubai Metro is such an example as it has challenged the structure of the rental market. Some areas such as Al Furjan and Discovery Gardens were fairly remote in the past but this has improved over time hence attracting demand and increased rental charges.
The effect of infrastructural developments on rent is not confined to residential areas only. New economic activities, for instance, new business and industrial areas also contribute towards rental demand. Dubai South development having been initiated by the Expo 2020 has lured many business entities and professionals to establish their businesses and workplaces, resulting to high demand for rentals hence the upward surge in prices.
While new developments and infrastructure projects often lead to higher rental prices, they can also help balance supply and demand in the market. New units can help to shift the demand from currently overburdened units which could effectively help to reduce and stabilize rentals’ costs within particular regions. For instance, new affordable housing schemes such as those in Dubailand have been developed in an effort to create an increased supply of middle-income housing and to take pressure off other areas of the city where rental prices may otherwise have been pushed up.
The long-term effects of new developments and infrastructural developments on rental charges are complex and far-reaching. These can have a short-term effect of raising prices but they contribute to a healthy and stable rental market in the long run. In addition to having a direct impact on Dubai's skyline, all of these projects will have an indirect impact on the future rental and investment real estate market.
It is for this reason that gaining early insight into these trends can highly benefit clients of Vardhman Realty in alleviating the challenges of renting a house in Dubai. By understanding the impact of new developments and infrastructure projects, we can provide informed advice to our clients, ensuring they make the best decisions in this ever-changing market.
