According to a recent report by real estate consultancy CBRE, residential rents in Dubai are predicted to rise further, albeit more slowly than in the past.
The consultancy noted that a number of important and prestigious residential neighbourhoods are expected to see single-digit growth and that “affordability constraints are beginning to catch up.”
Average residential rents increased by 21.1% in May 2024, up from the 20.8% growth a month earlier. A 22.2% increase in average apartment rent and a 13.1% increase in average villa rent served as the foundation for the increase.
Rent for an apartment was AED 126,598 on average in May 2024, while the rent for a villa was AED 352,572 annually. Palm Jumeirah had the highest average annual rental prices for apartments and villas, at AED 272,867 and AED 272,867, respectively.
Additionally, the report stated that secondary communities are seeing significant yearly increases in rent as a result of higher rents in the emirate’s core and prime residential areas.
According to the report, secondary communities in the emirate are experiencing significant yearly rent increases as a result of higher rents in the central business district and desirable residential areas.
As for the rental registrations, they totalled 255,178 in the first five months, up 5.9% year over year, according to data from the Dubai Land Department. The growth in renewed rental registrations, which accounted for 12% of the increase, was offset by a 3% decline in newly registered contracts.
“We are seeing tenants choosing to renew in the same place, as the rate of rental growth in certain neighbourhoods has significantly weighed on affordability,” CBRE stated.
Meanwhile, Freehold villa developments in Dubai experienced phenomenal growth, surpassing the highest peak values recorded in 2014. A critical threshold in the local real estate market is demonstrated by the average valuation of freehold villas, which exceeded 10 million UAE dirhams (USD 2.72 million).