Dubai has experienced a significant rent increase of up to 15% since the Real Estate Regulatory Authority (Rera) updated its Rental Index in March 2024. the updated index has led to higher renewal rates as tenants prefer to stay in their current residences due to the rising costs of new leases.
Year-on-Year Rental Growth
Rents in Dubai have climbed 64% since the pre-COVID-19 era (Q1 2020), with a 19% increase year-on-year in Q2 2024. This consistent rise over the last 14 quarters has encouraged more tenants to renew their contracts rather than move to new properties.
Villa and Apartment Rental Trends
Villa rents in Dubai have increased by 21% in the affordable category, 12% in mainstream areas, and 1% in prime districts. Similarly, apartment rents have risen by 27% in affordable areas, 19% in mainstream locations, and 14% in prime districts during the second quarter of 2024.
Signs of Stabilisation in the Market
Although villa rentals have shown signs of stabilisation, with city-wide villa rents increasing by 13% year-on-year, apartment rents have continued to grow, rising by 22% compared to the previous year. The number of lease renewals saw a 14% increase in Q2 2024, indicating a trend toward stability in the rental market.
Mid-Market and Affordable Districts Lead the Increase
Mid-market and affordable districts have seen the most significant rental increases, recovering from historically lower bases. Villas in Jumeirah Village Circle recorded the highest year-on-year increase at 40%, followed by Jumeirah Park (22%) and The Springs and The Meadows (14%). Among apartment districts, Discovery Gardens led with a 32% increase, followed by Dubai Sports City (28%) and Dubailand (24%).
Market Stabilisation and Sales Price Trends
The rental market is showing signs of stabilisation, with nearly 21% of rental listings in the first half of 2024 experiencing a price decrease, compared to 17% in H1 2023. Sales prices across Dubai have also continued to rise, with a 21% year-on-year increase in city-wide sales prices for the 16th consecutive quarter. However, prime districts are seeing a moderation in sales price increases, while mainstream and affordable districts are facing steep price hikes, impacting affordability.
Off-Plan Sales Price Trends
Primary off-plan sales prices are currently higher than secondary off-plan prices across most Dubai districts and projects. Although the percentage difference is still in single digits, it suggests that sellers are finding it challenging to match original prices and are selling slightly below market value to exit. This trend may continue as more off-plan supply enters the market.
Reference: Khaleej Times
