By Staff Reporter
Dubai Rents Climb by Up to 15% Following Rental Index Update
Dubai’s rental market has seen a significant increase of up to 15% since the Real Estate Regulatory Authority (RERA) updated its Rental Index in March 2024. This surge in rent prices has led to a notable rise in the number of tenants renewing their contracts, as renewing tends to be more cost-effective than signing new leases, which are generally higher.
According to Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core,
“The updated RERA rental index reflects increases of 8 to 15% across most districts. We’ve observed a higher rate of renewals as tenants prefer to stay in their current homes due to the lower costs compared to new leases.”
Rents in Dubai have risen by 64% since the pre-COVID-19 quarter of Q1 2020, with a 19% year-on-year increase in Q2 2024. This consistent upward trend, now in its 14th consecutive quarter, has prompted more tenants to renew their leases.
Villa rents have increased by 21% in affordable areas, 12% in mainstream districts, and 1% in prime locations. Similarly, apartment rents rose by 27% in affordable areas, 19% in mainstream districts, and 14% in prime locations during Q2 2024, as reported by Cushman & Wakefield Core.
Despite these increases, there are signs of moderation in villa rentals and secondary residential sales, with transaction volumes plateauing. Gurrapu noted,
“City-wide villa rents have stabilized, rising by 13% year-on-year, while apartment rents are up by 22% compared to the same period last year. Mid-market apartment districts have seen the steepest rent increases, while prime districts experienced lower levels of growth.”
The mid-market and affordable districts are recovering from historically lower rent bases, while the prime market, which saw sharp increases in 2022-2023, is now stabilizing. The rental market remains landlord-friendly, with rents continuing to rise, though the pace of growth has slowed compared to last year. Gurrapu also highlighted that household incomes are not keeping pace with rising rents, further contracting disposable incomes.
Villas in Jumeirah Village Circle saw the highest year-on-year rent increase at 40%, followed by Jumeirah Park (22%) and The Springs and The Meadows (14%). In the apartment sector, Discovery Gardens saw the sharpest increase at 32%, followed by Dubai Sports City (28%) and Dubailand (24%).
Gurrapu pointed out that the rental market showed signs of stabilization, with nearly identical numbers of rental listings showing no change in price during the first halves of 2023 and 2024. Additionally, 21% of rental listings in H1 2024 saw price decreases, compared to 17% in H1 2023.
City-wide sales prices continued to rise for the 16th consecutive quarter, with a 21% year-on-year increase. Gurrapu noted that while prime districts showed moderation in sales price increases, mainstream and affordable districts experienced steep rises, significantly impacting their affordability.
Primary off-plan sales prices are higher than secondary off-plan prices across most Dubai districts and projects. Although the percentage difference remains in single digits, it suggests that sellers are struggling to match original prices and are selling slightly below market value to exit. This trend may grow in the coming quarters as more off-plan supply enters the market, according to Gurrapu.
News Source: Khaleej Times
