Rents in Dubai will continue to rise, but at a slower pace as the market has started showing signs of stability with more rental listings remaining unchanged during the second quarter of this year.
Data showed that more Dubai residents renewed their tenancy contract during the second quarter amidst rentals reaching an all-time high in the emirate.
“In both the sales and rental markets, we expect that rates will continue to rise. However, we will not see this happen at the same pace, particularly as the market has started showing some signs of stability,” said Taimur Khan, head of research at CBRE.
In the first half of 2024, he said rates of 88.1 per cent of sales listings and 73.8 per cent of rental listings remained unchanged, up from 79.6 per cent and 72.9 per cent over the same period a year earlier, respectively.
“Performance within Dubai’s residential market is expected to remain strong over the upcoming period,” he said at the release of the second quarter report.
Following a three-and-a-half year rally, rentals and prices continue to rise in 2024, especially in the prime segment, due to the inflow of high-net-worth individuals into Dubai.
This has also pushed transactions to record highs in the emirate.
“The rate at which rents continue to grow remained unwavering, where average residential rents grew by 21.1 per cent in the year to June 2024, driven by a 22.2 per cent growth in average apartment rents and a 12.7 per cent increase in average villa rents. As of June 2024, the average apartment and villa rents stood at Dh127,969 and Dh354,512 per annum, respectively,” Khan said.
During the January-June 2024 period, the highest apartment and villa annual rents were recorded in Palm Jumeirah, with asking rents standing at an average of Dh279,826, and in Al Barari, with rents reaching an average of Dh1,344,844.
More residents renewing tenancy contract
Based on data from the Dubai Land Department, in the first half of the year, a total of 299,564 rental contracts were registered, up by 52.5 per cent from the 2019 figure, and 5.8 per cent from the same period in 2023.
“This year-on-year increase has been primarily supported by an 11.9 per cent increase in the total number of renewed contracts registered, whilst new registrations declined by 3.7 per cent, where we are continuing to see tenants choosing to renew their existing leases as opposed to leasing new units within which would almost certainly be at significantly higher costs,” Khan said.