Rents in Dubai have surged by up to 15 percent since the Real Estate Regulatory Authority (Rera) updated its Rental Index in March. "The Rera rental index update this year reflects rental hikes, with most areas experiencing increases between 8 and 15 percent. We've noticed a greater number of lease renewals over new agreements as tenants prefer to stay in their current homes due to new leases being pricier," explained Prathyusha Gurrapu, Head of Research and Consulting at Cushman & Wakefield Core. Rents are now 64 percent higher than in Q1 2020, before the pandemic, and rose 19 percent year-on-year in Q2 2024. This steady rise over the past 14 quarters has led to more contract renewals.
Villa rents in Dubai saw a 21 percent increase in the affordable bracket, 12 percent in mainstream areas, and just 1 percent in prime locations. Meanwhile, apartment rents in these categories jumped by 27 percent, 19 percent, and 14 percent, respectively, in Q2 2024, according to a report from Cushman & Wakefield Core. However, there are signs of a slowdown in villa rentals and secondary residential sales, with transaction volumes leveling off. "City-wide villa rents have stabilized, rising 13 percent year-on-year, while apartment rents increased by 22 percent over the same period. We've seen a higher rate of renewals, with a 14 percent increase in the second quarter of 2024," Gurrapu noted.
Gurrapu also pointed out that mid-market and affordable areas are rebounding from historically low levels, while the prime market, which saw steeper increases in 2022-2023, is now stabilizing. "The rental market remains favorable for landlords, with rents rising across the board, albeit at a slower pace than last year... Household incomes are struggling to keep up with escalating rents, further reducing disposable incomes," she added. Villas in Jumeirah Village Circle saw the steepest year-on-year rise at 40 percent, followed by Jumeirah Park (22 percent) and The Springs and The Meadows (14 percent). Apartment rents also increased significantly, with affordable areas like Discovery Gardens leading at 32 percent, followed by Dubai Sports City (28 percent) and Dubailand (24 percent).
The Head of Research and Consulting at Cushman & Wakefield Core further explained that the rental market showed signs of stabilization, with nearly the same number of rental listings unchanged in price between the first halves of 2023 and 2024. In fact, about 21 percent of listings in H1 2024 saw a decrease in listed prices compared to 17 percent in H1 2023. City-wide sales prices continued to climb for the 16th straight quarter, up 21 percent year-on-year. "Prime districts are seeing a moderation in sales price increases, while mainstream and affordable areas are experiencing steeper rises, significantly impacting affordability," Gurrapu noted. Primary off-plan sales prices are higher than secondary off-plan prices across most districts, indicating sellers may be struggling to meet original prices and are selling slightly below market value to exit. This trend could intensify with more off-plan supply entering the market.
