Rents in Dubai have increased by up to 15% since the Real Estate Regulatory Authority (Rera) Rental Index was updated earlier in March of this year.
“The Rera rental index was updated earlier this year to reflect rental increases, with most districts seeing increases in the range of 8 to 15 per cent. We have seen a higher number of renewals compared to new leases as tenants look at renewing in existing premises since new leases continue to be higher than renewals,” said Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core.
In Q2 2024, rents increased by 19% year over year; this accounted for 64% of the increase from Q1 2020’s pre-Covid-19 quarter. Due to this consistent increase over the last 14 quarters, tenants are renewing their leases at a higher rate.
In Dubai, villa rentals increased by 21% in the affordable category, 12% in the mainstream category, and 1% in the prime districts during the second quarter of 2024. On the other hand, the rent increases for the three apartment segment categories were 27%, 19%, and 14%, respectively. This is consistent with a report released on Thursday by Cushman & Wakefield Core.
Conversely, as transaction volumes level off, secondary residential sales and villa rentals exhibit signs of moderation.
“We saw a relative stabilisation in city-wide villa rents, which have risen by 13 per cent year-on-year, whereas apartment rents are up by 22 per cent compared to the same period last year. We have seen a higher percentage of tenants continuing to renew, with the number of renewals in the second quarter of 2024 seeing a 14 per cent increase. Similar to the trends seen in the sales market, rents in the mid-market apartment districts saw the steepest rise in rents, whereas prime districts saw lower levels of increase,” said Prathyusha Gurrapu.
Gurrapu continued, “The prime market saw sharper increases earlier in the market cycle over 2022–2023, which are now stabilizing,” while the mid-market and affordable districts are rebounding from historically lower bases.
“The rental market continues to be landlord-friendly, with rents increasing across the board, though the pace of growth has slowed compared to last year… Household incomes are not keeping pace with rising rents, which is further contracting disposable incomes,” she added.
Villas in Jumeirah Village Circle saw the highest year-on-year increase by 40 percent, followed by Jumeirah Park (22 percent) and The Springs and The Meadows (14 percent). However, all the apartment districts saw higher year-on-year rental increases, with the affordable districts experiencing the sharpest increases, including Discovery Gardens (32 percent), followed by Dubai Sports City (28 percent) and Dubailand (24 percent),” she added.
The head of research and consulting at Cushman & Wakefield Core claims that the nearly equal number of rental listings with unchanged listed prices in the first half of 2023 and 2024 indicates that there has been some stabilization in the rental market. She claims that in the first half of 2024, the listed price of nearly 21% of rental listings fell as opposed to 17% in the same period in 2023.
Cushman and Wakefield Core reports that city-wide sales prices increased by 21 percent year over year in the 16th consecutive quarter, maintaining their upward trajectory. “We have seen the prime districts mark relative moderation in sales price increases while mainstream and affordable districts are witnessing steep increases – albeit significantly impacting their affordability,” she added.
Primary off-plan sales prices are higher than secondary off-plan prices in the majority of Dubai districts and off-plan projects. Even though the percentage difference is still in the single digits, it shows that sellers are having trouble keeping their original prices, so they are having to sell their inventory at a slight discount in order to get rid of it. Gurappu said it’s critical to monitor this trend as more off-plan supply enters the market in the coming quarters, potentially escalating it.
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