Dubai residential rents increase 27.2% in Q3

About 46.4% of Dubai’s residential supply this year is found in Business Bay, Downtown Dubai, and Meydan One. — KT File

In the third quarter of 2023, Dubai’s residential rents increased by 27.2 percent from the same period the previous year and by 2.1 percent from the preceding quarter.

Villa rentals increased 38.7% yearly, but there was no movement from the previous quarter, according to ValuStrat’s Q3 report.

Three-bedroom villas are rented for an average of Dh312,000 a year, four-bedroom villas for Dh383,000, and five-bedroom villas for Dh492,000. The asking rent for apartments increased by 3.6% QoQ and 19.1% YoY. Studio apartments had an average annual asking rent of Dh51,000, one-bedroom apartments Dh75,000, two-bedroom apartments Dh111,000, and three-bedroom apartments Dh170,000. In Dubai, the third quarter’s expected residential occupancy rate was 88.9%.

According to a CBRE Group report, average residential prices in Dubai rose by 19.6 percent in the year to September 2023, where over this period, average apartment and villa prices increased by 19.7 percent and 18.9 percent, respectively. “Although demand remains relatively elevated, we continue to see further moderation in the rental market. The rate of rental growth has softened throughout the year, where in the year to September 2023, average residential rents in Dubai increased by 20.6 percent, down from the 21.7 percent growth registered a month earlier.”

According to estimates, 27,095 residential units have been supplied so far this year; Meydan One, Downtown Dubai, and Business Bay account for 46.4% of the total supply. The CBRE research stated that 34,651 more units are anticipated to be delivered for the balance of the year.

However, research by property experts Allsopp & Allsopp claims that in the third quarter of 2023, rent in Dubai’s upscale residential areas decreased by an average of 21%. According to Allsopp & Allsopp, who reported a 20% increase in rental transactions and a 29% increase in new rental client registrations from July to September, the study indicates that the rental market experienced a surge in rental transactions over the summer of this year.

According to data from the Dubai Land Department, the third quarter of 2023 saw extraordinary growth in the real estate market in Dubai. Transactions have increased by 22%; in Q32023, 31,216 transactions were made, up from 25,503 during the same period in 2022. The total value of these transactions, which reached Dh 97.55 billion, a stunning 40% increase from Dh 69.5 billion in Q3 2022, reflects this spike in transactional activity.

According to Husni Al Bayari, chairman and founder of D&B Properties, the Q3 2023 real estate performance “encapsulates Dubai’s property market not just as enduring but as a dynamic force of innovation and adaptability. It’s not merely about numbers; it’s about Dubai’s remarkable ability to evolve and thrive in the face of changing global landscapes. The substantial surge in transactions and market worth is a living testament to the city’s unwavering charm among investors worldwide, showcasing Dubai as a resilient and forward-thinking real estate powerhouse.”

In the third quarter, office space in Dubai saw annual capital gains of 25.5 percent. The VPI grew 7.3 percent quarterly to reach 103 points, that’s compared with a 100-point base in Q1 2015, the ValuStrat report said. ‘The weighted average price for an office in Dubai was Dh14,230 per sq m. Continued double-digit annual growth was seen in five major central business districts in Dubai: Jumeirah Lake Towers (37.2 percent), DIFC (33.7 percent), Business Bay (22.2 percent), Downtown Dubai (16.8 percent), and Barsha Heights (14.8 percent). Shell and core Grade A office space saw valuations expand 33.3 percent YoY, while the same classified Grade B grew 19.2 percent YoY.’

Office transitions increased by 9.0% YoY in Q3 2023, but QoQ decreased by 4.7%, with 631 transactions. At Dh11,140 per sq m (ADh1,035 per sq ft), the median transacted price increased by 9.1% on a quarterly basis and by 28.4% on an annual basis.

-Patrick Bernardo

Chief Operating Officer