Rents in prime Dubai residential areas are poised to see up to 20 per cent in 2024 after a year of remarkable upswing estimated to be in the range of 23-30 per cent.
Property experts predict the sustained buoyancy for multiple reasons including increased investor appetite, rising influx of professionals, population surge, and the city’s growing appeal as a haven for the wealthy.
They said if net migration to Dubai continues to be higher than the rate that new homes are handed over, it will continue to put upward pressure on rental prices. Factors that could dictate the trajectory of rents in 2024 include more residents opting to buy rather than renting their homes, and the growing appeal of property as an attractive investment opportunity.
After a sharp uptick in rental prices by 23 per cent annually in the first half of 2023, and a year-end projection of around 30 per cent, the upward trend appears strong, according to Ilnara Muzafyarova, head of Colife, a real estate management firm. Muzafyarova predicted a 20 per cent jump in short-term rentals (up to 6ix months) compared to 2023, and a 15 per cent rise for long-term or above six months. This is anchored by the organic growth within the market, which has also seen a 15 per cent rise in apartment prices from mid-2022 to mid-2023.
In November 2023, S&P projected a 5.0 per cent to 7.0 per cent increase in house prices during 2024. Tatiana Leskova, associate director of Corporate Ratings at S&P, said there is no evidence of a slowdown in Dubai’s real estate prices this year.
Analysts at real estate consulting company CBRE said rents in Dubai have risen by approximately 42 per cent since January 2020, while house prices have increased by around 33 per cent. Villa rents have also experienced a similar trend, reaching an average of $88,400 per year, with a 19.2 per cent increase in average rent recorded in November.
Experts said the upward momentum in rents reflects the vibrancy of Dubai’s real estate market, with property values escalating alongside the operational high-rise buildings and property transactions surging.
Colife experienced a notable 21.2 per cent increase in monthly income to $2,970 over the past year for the owner of a one-bedroom unit located in Dubai Marina. Going forward, owners can anticipate even heftier returns in the vicinity of $3,415 per month in 2024, according to Colife.
Realty experts believe that given the continued influx of global professionals to Dubai, coupled with its population growth a sustained demand for residential space can be expected.
According to real estate consultancy Asteco, the Dubai rental market has seen a gradual moderation in growth rate in the third quarter. There is a definite slowdown with rental gains at 3.0 per cent, 2.0 per cent, and 4.0 per cent for apartments, villas and offices over the three months. On an annual scale, the changes stood at 18 per cent, 19 per cent and 29 per cent, respectively, said Asteco.
Property Finder’s November data shows one-bedroom apartments witnessing the highest demand. Around 36 per cent of people were found to search for one-bedroom apartments, while 30 per cent looked for two-bedroom apartments, and 24 per cent for studios. For villas/townhouses, 42 per cent looked for three bedrooms, and 35 per cent were searching for four-bedroom and larger options. Furnished homes were preferred by 66 per cent of tenants, but 32 per cent wanted unfurnished. For villas/townhouses, 51 per cent looked for unfurnished, and 48 per cent sought furnished listings.
Dubai’s population, as of July 2023, stood at 3,604,030 people, up from 3,515,264 in July 2022, according to the Dubai Statistical Centre. As per Dubai’s Development Master Plan, the city’s population is projected to grow to 5.8 million by 2040.
– Patrick Bernardo
Chief Operating Officer