According to the latest reports, rental rates for both Dubai apartments and villas have reached new highs.
Over the past year, average rents have increased by 22%, indicating a sustained upward trend in rental prices.
Specifically, in 2023, the average rental rate for Dubai apartments is 95.5 dirhams per square foot, a difference of only 2 dirhams compared to 2017. Meanwhile, villa rental rates have reached an all-time high of 91.3 dirhams per square foot.
The report also notes that Dubai's rental market has seen significant growth in rents and activity over the past two years, ending a period of negative growth that persisted from mid-2015 to the end of 2021.
As of July 2023, the total number of rental contracts increased by 43.5% to reach 325,727 contracts.
It's worth noting that over the past four years, landlords often provided incentives such as rent-free months, discounts, or installment payments to attract new tenants and retain existing ones.
However, with the rise in demand, this trend is reversing, and the prices of newly signed rental contracts now exceed the average prices of renewal contracts. By July 2023, the average premium rate for new apartment rental contracts compared to renewal contracts is 20.1%.
Additionally, the report highlights that most tenants are choosing to renew their leases because they wish to avoid the costs associated with relocation.
As a result, the number of newly registered rental contracts has decreased by 12.6%, while renewal registrations have increased by 29%. In prime locations and core residential areas, rental regulations provide tenant protections that limit annual rent increases to a maximum of 20%.
Overall, the surge in demand in the Dubai residential rental market has shifted the market dynamics, allowing for significant premiums on new rental contracts.
The apartment market is facing a test of its capacity as renewal contracts approach market rents. In the villa sector, premiums may remain at higher levels for a longer period due to differences in supply and demand.
