It is reported that Dubai's population has been steadily increasing, attracting a growing number of foreign businesses and job seekers. As of this Sunday, the population of Dubai stood at 3,636,610, compared to 3,550,400 by the end of 2022, marking an increase of 86,210 people.

Simultaneously, the local job market remains highly active, drawing in numerous new job seekers to Dubai. These factors have collectively contributed to the increased demand for rental properties.

According to the third-quarter data released by Bayut, rental prices in reasonably priced villa communities have risen by 3% to 16%, while luxury villa rentals have increased by 21%.

Economical villa options are predominantly concentrated in Jumeirah Village Circle (JVC) and Al Nahda, whereas renters seeking villas are mainly considering Damac Hills 2 and Mirdif. In terms of luxury residences, Dubai Marina and Business Bay remain popular choices for apartment rentals, while Dubai Hills and Arabian Ranches 3 are hotspots for high-end villa rentals.

It's worth noting that Dubai's rental market has witnessed substantial growth in both rents and activity over the past two years, ending a downturn phase from mid-2015 to the end of 2021.

According to data from the Dubai Land Department, the total number of registered lease contracts reached 325,727 in the middle of 2023, representing a 43.5% increase compared to the 227,011 contracts registered during the same period in 2019. Dubai's real estate market has also attracted an increasing number of international investors.

With the rising property prices in Dubai, tenants are facing increased rental pressure. However, tenants are effectively utilizing the protection provided by the RERA rental regulations. The RERA rental regulations aim to limit the allowable annual rental increases to a maximum of 20%.

Taimur Khan, Head of Research at Savills, noted that the local rental market is relatively fragmented. "Firstly, the total number of new registered contracts has declined by 12.6%, while renewals have increased by 29%, indicating a reluctance among tenants to relocate as they are not prepared or financially capable of bearing the significantly higher rents in new leases, especially in prime locations and core residential areas. These tenants are effectively utilizing the protection provided by the RERA rental regulations."

Looking ahead, Savills expects that the premium for new lease contracts for apartments has peaked and anticipates a gradual reduction in the premium as renewal contracts adjust according to market prices.

However, the villa market is facing a supply-demand imbalance, and short-term villa rentals are expected to remain stable. In the long run, as new rental levels gradually stabilize, the villa rental premium is likely to decrease.