Since the Real Estate Regulatory Authority (Rera) Rental Index was updated earlier in March of this year, rents in Dubai have risen by as much as 15%.
“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.
Rents rose by 19% year over year in Q2 2024, accounting for 64% of the increase from the pre-Covid-19 quarter of Q1 2020. Tenants are renewing their contracts at a higher rate as a result of this steady increase over the last 14 quarters.
The second quarter of 2024 saw increases in villa rents in Dubai of 21% in the affordable category, 12% in the mainstream category, and 1% in prime districts. In contrast, the three apartment segment categories saw increases in rent of 27%, 19%, and 14%, respectively. This is in line with a report that Cushman & Wakefield Core published on Thursday.
On the other hand, secondary residential sales and villa rentals show signs of moderation as transaction volumes plateau.
“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.
According to the head of research and consulting at Cushman & Wakefield Core, there has been some stabilization in the rental market as evidenced by the nearly equal number of rental listings with unchanged listed prices in the first half of 2023 and 2024. According to her, the listed price of almost 21% of rental listings decreased in the first half of 2024 compared to 17% in the same period in 2023.
According to Cushman and Wakefield Core, city-wide sales prices continued their upward trajectory for the 16th consecutive quarter with a 21 percent year-on-year increase. “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.
In most Dubai districts and off-plan projects, primary off-plan sales prices are higher than secondary off-plan prices. While the percentage difference is still in the single digits, it indicates that sellers are finding it difficult to maintain original prices and are selling at a slight discount to clear out their inventory. Gurappu stated that it is important to keep an eye on this trend because it might intensify in the upcoming quarters as more off-plan supply enters the market.
