Rental prices rise 24% in certain areas of Dubai

After falling 54% between Q4, 2008 and Q4, 2011, lease rates in Dubai have risen by an average of 17% over the past year - with some established locations witnessing even higher growth - amidst renewed confidence in the market, the report found.

"Dubai is seeing higher rental growth this year due to a sustained period of population growth, positive economic performance, increased occupier demand and limited availability of quality units in the most desirable locations," Matthew Green, head of United Arab Emirates' research at CBRE Middle East, wrote in the report.

Popular locations such as Downtown Dubai, Dubai Marina, Greens, Jumeirah Beach Residence and Palm Jumeirah have seen lease rates climb by an average of 24% year-on-year, the report added.

Sale prices have also risen sharply in the emirate, with Garden Villas on the Palm Jumeirah leading the way with a 22% rise in prices, followed by Springs and Meadows which have registered 20% and 18% growth respectively. Arabian Ranches, Meadows, Palm Jumeirah (Garden Villas), Springs and Jumeirah Islands have registered increases of 16% year-on-year, the report added.

About 36,000 apartments and single-family homes might be completed from 2013 to 2015 provided construction delays are minimal, the report said. The majority of residential supply is expected from locations such as Dubailand, while about 26% of it will be in Motor City, Dubai Sports City, Liwan and Dubailand Residences

"With supply levels becoming increasingly tight in popular community areas, further product launches are anticipated during 2013," Green said. Although investor confidence is growing, "the main focus for investors remains completed assets in established locations," he wrote.

Dubai's property sector is once again making global headlines thanks to a string of major announcements in recent weeks, including plans for developing a new district with the world's largest mall, 100 hotels and gardens larger than London's Hyde Park.

Shortly after the Mohammad Bin Rashid City was announced, Dubai said it would build five theme parks for $2.7bn.

The report said that the launch of new mega-projects in Dubai shows a clear commitment to continued infrastructure spending in the emirate, which is in line with Dubai's 2020 Expo bid and the 2030 Strategic Plan. "This is likely to have positive knock-on effects for the real estate sector and the economy as a whole," the report added.