Average rents for flats and villas continued to rise in the second quarter of 2023, but rents across Dubai are still showing signs that they may be reaching the ceiling. In the first half of the year, rents in these two segments rose by six per cent and three per cent respectively, reaching highs of 21 per cent and 23 per cent.
The latest report from property management and real estate services company Asteco states that nearly 11,000 residential units were delivered in the second quarter of 2023, with flats accounting for 9,400 of these.
Whilst rents continue to grow in 2023, market indicators suggest that rents have reached their ceiling.
The report cites the difference between the list price and the contracted price recorded by the Dubai Land Department (DLD) as a key indicator of the rental cap, noting that flats and villa units tend to be at the lower end of the range, even though they are not.
The report further notes that growth has slowed in some neighbourhoods and asset classes, particularly in the villa segment. Areas such as Maidan, Arabian Ranches 3 and Al Furjan have seen minimal rental growth due to increased supply in Q2 2023.
Neighbourhoods with the highest rental increases in Q2 2023 include Downtown Dubai, Palm Jumeirah and Dubai Marina. One-bedroom rents in Downtown Dubai jumped from Dh75,000 to Dh160,000, two-bedroom rents jumped from Dh110,000 to Dh240,000, and three-bedroom rents climbed sharply from Dh160,000 to Dh400,000.
In addition, popular residential neighbourhoods such as Dubai Silicon Oasis, notably Cedre Villas, Al Waha and Layan Villas, Jumeirah Beach Residential (JBR) and The Greens and Views, saw higher than average rental increases due to limited availability and tenant turnover.
Similarly, villa rents in neighbourhoods such as Jumeirah Palms, Jumeirah Country Roundabout and The Springs saw the highest year-on-year increases. A five-bedroom villa on Jumeirah Palm Island averaged Dh650,000 last year, while it is now priced at Dh1.1 million.
The report notes that sales price growth also appears to be slowing, with sales prices for flats, villas and offices increasing by 2 per cent, 3 per cent and 4 per cent respectively in the second quarter of 2023.
