Buckle up, Dubai dwellers- because if you thought your rent couldn’t get any higher, think again. The city’s latest rental index update has sent prices skyrocketing, with increases that could make even the most seasoned expats gasp. But hey, who needs affordable living when you’ve got skyline views and luxury malls, right? While some tenants are scrambling to renew their contracts before the rates climb any further, others are wondering if it’s time to trade their swanky apartments for something a little more wallet-friendly.
Welcome to Dubai, where the rent is as high as the Burj Khalifa, and it’s showing no signs of coming down. Rents in Dubai have surged by up to 15% following the Real Estate Regulatory Authority (Rera) Rental Index update earlier this year, causing a significant impact on tenants across the city. The update, which took place in March, has led to widespread increases in rental rates, with most districts experiencing hikes between 8% and 15%.
This rise has prompted a higher number of tenants to renew their existing contracts rather than seeking new leases, as new rental agreements continue to be pricier than renewals. A post shared by Khaleej Times (@khaleejtimes) According to Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core, rents in Dubai have climbed by 64% since the pre-COVID-19 period, with a 19% year-on-year increase in Q2 2024 alone. The rental market has now seen 14 consecutive quarters of growth, pushing many tenants to opt for renewals as a more cost-effective choice.
Villa rents in the city have also risen, with a 21% increase in the affordable category, 12% in mainstream areas, and 1% in prime districts. Apartment rents, on the other hand, have seen increases of 27%, 19%, and 14% in the same categories, respectively. Also Read: Dubai airport plans to remove passport checks for eligible travellers: This is the future of flying Despite the overall upward trend, signs of moderation have begun to appear, particularly in villa rentals and secondary residential sales.
The rate of increase in villa rents has stabilized, with a 13% year-on-year rise, while apartment rents have continued to grow by 22%. The second quarter of 2024 witnessed a 14% increase in contract renewals, reflecting tenants' preference to stay put amid the rising rental costs. A post shared by Arabian Business (@arabianbusiness) Mid-market and affordable districts have shown significant recovery from historically lower rental bases, while prime markets, which experienced sharp increases in 2022-2023, are now stabilizing.
Gurrapu noted that the rental market remains landlord-friendly, though the pace of growth has slowed compared to the previous year. Household incomes, however, are not keeping pace with the rising rents, further squeezing disposable incomes. A post shared by Dubai Scoops (@dubaiscoops) Villas in Jumeirah Village Circle saw the highest year-on-year increase of 40%, followed by Jumeirah Park at 22%, and The Springs and The Meadows at 14%.
Meanwhile, affordable apartment districts recorded the steepest rental hikes, with Discovery Gardens leading at 32%, followed by Dubai Sports City at 28%, and Dubailand at 24%. Gurrapu also highlighted that nearly 21% of rental listings in the first half of 2024 saw price decreases, indicating some stabilization in the market. City-wide sales prices have continued to rise, marking the 16th consecutive quarter of growth with a 21% year-on-year increase, although prime districts have shown relative moderation.
The trend of primary off-plan sales prices surpassing secondary off-plan prices suggests that sellers may be struggling to match original prices, potentially leading to lower-than-expected sales in the future. Also Read: The Golden Visa Appeal: How Dubai is winning over India’s rich and famous.
