Dubai Rental Market Continues to Rise in Q3 2023

Rents in affordable and luxury segments continued their upward trend in Dubai during the third quarter of 2023, driven by the emirate’s increasing population and a thriving local economy.

Economic Expansion and Demand:

As Dubai’s economy expands with the influx of foreign businesses, the job market has become more active, attracting new jobseekers and, consequently, increasing the demand for rental properties.

As of Sunday, Dubai’s population stood at 3,636,610, compared to 3,550,400 at the end of 2022, marking an increase of 86,210.

Rental Trends:

According to property portal Bayut’s third-quarter data, affordable apartment rentals in popular areas have seen price increases of up to 11%. 

In comparison, luxury apartment rentals have increased by as much as 13%. Areas with reasonably-priced villas experienced price upticks ranging from 3% to 16%, while luxury villa rentals increased by up to 21%.

Popular Rental Areas:

In the affordable segment, Jumeirah Village Circle (JVC) and Al Nahda have been popular choices for apartment rentals. For villas, Damac Hills 2 and Mirdif have garnered attention. 

In the luxury segment, Dubai Marina and Business Bay remain favored options for apartment rentals, while Dubai Hills Estate and Arabian Ranches 3 are sought after for high-end villas.

Haider Ali Khan, CEO of Bayut and head of Dubizzle Group Mena, highlighted the market’s resilience, stating that it shows no signs of slowing down. 

The UAE’s growth across various sectors, including tourism, real estate, and energy, contributes to the rental market’s robust performance.

Reversal of Negative Growth:

Dubai’s rental market has reversed the negative growth cycle from mid-2015 to late 2021. 

In the year to date through July 2023, the Dubai Land Department reported a 43.5% increase in the total number of tenancy contract registrations compared to the same period in 2019.

Rental Market Dynamics:

Taimur Khan, head of research at CBRE, noted the fragmentation of the local rental market, with new contract registrations decreasing by 12.6% while renewed registrations grew by 29%. 

Tenants appear less willing to relocate due to higher rates on new leases, particularly in prime and core residential areas.

Premiums and Future Trends:

CBRE expects that premium levels for new rental contracts have peaked, with premiums decreasing since January 2023. 

The villa segment faces undersupply, and premiums are likely to remain stable. 

Over the long term, as new rental levels stabilize, premium levels are expected to decrease as new renewals adjust to the stabilized market rate.