Dubai: Rental market records 27.3% increase this year

The Dubai rental market sustained strong double-digit growth this year in line with the real estate sector that continued its golden run throughout the year due to high demand from the investors and end users following drastic visa and business reforms.

Latest data released by CBRE indicated that average asking rents rose by 27.3 per cent in the year to November 2022, with average apartment rents increasing by 27.6 per cent and average villa rents surging by 25.4 per cent, respectively.

“As of November 2022, the average annual apartment and villa rents stood at Dh93,359 and Dh278,546, respectively. Palm Jumeirah registered the highest average annual apartment and villa rents, where asking rents reached an average of Dh243,219 and Dh982,047, respectively,” according to CBRE’s Dubai Residential Market Snapshot – December 2022.

Record activity in 2022

Taimur Khan, head of research for Mena at CBRE in Dubai, activity levels in Dubai’s residential market have reached record mark in the year-to-date to November 2022 with total transactions volume reaching 81,919, surpassing record highs of full year 2009, when transaction numbers totalled 81,182.

“This strong level of activity has continued to support increases in average prices, which for apartments and villas have risen by nine per cent and 12.7 per cent in the 12 months to November 2022, respectively. However, we are seeing the rate of average price growth slowing, particularly in the villa market, a trend which we expect the apartment market to follow suit in the short run,” Khan said in a statement to Khaleej Times on Tuesday.

He said certain prime markets will continue to record strong growth rates. In the rental market, he said average rents are continuing to grow at near record highs. “In response, tenants seem more likely to renew existing tenancies. That has been portrayed through Ejari data, which shows that the number of new contracts registered year-on-year in the year to date to November 2022 dropped by 5.8 per cent, whereas renewals increased by 33.8 per cent,” he said.

Investors rush to Dubai

Ata Shobeiry, chief executive of Zoom Property, said 2022 is proved a remarkable year for Dubai real estate market as investors flocked to the emirate following the government’s successful strategy to overcome Covid-19 pandemic.

“With more people selecting Dubai as their second home, the demand for rental properties is witnessing a spike. This has resulted in a significant increase in rental prices. For landlords, it's certainly a good sign, but tenants are reluctant to change accommodation due to an increase in rent,” Shobeiry told Khaleej Times.

“As Dubai is all set to welcome more visitors in 2023, the average property rent is expected to increase further,” he said.

He said popular areas in Dubai continue to attract tenants, as they drive the rental market. “While Business Bay, Downtown Dubai, and Al Barsha remain the preferred choices of tenants, it's Palm Jumeriah that has reported the highest increase in the average rent,” he said.

Ayman Youssef, vice-president, Coldwell Banker UAE, the rental market graph this year has witnessed a considerable upward spike with rents increasing across all property segments. “The growth yield has increased to 6.5 per cent, up from 5.7 per cent last year. The rental market continues to hold strong without any signs of cooling down on the short term. So far, the market has been able to absorb the additional supply of units with healthy occupancy rate specially in prime areas,” he said.

November a record month

CBRE data showed that Dubai’s total transaction volumes stood at 10,505 in November, reflecting an increase of 60.8 per cent compared to the previous year. This strong growth was supported by a 63.3 per cent rise in off-plan transactions and a 58.4 per cent rise in secondary market deals.

“In the year to date to November 2022, a total of 81,919 residential transactions have been recorded, surpassing the record highs registered in 2009 over the same period,” according to CBRE’s Dubai Residential Market Snapshot – December 2022.

In the 12 months to November 2022, average prices increased by 9.5 per cent. Over this period, average apartment and villa prices increased by nine per cent and 12.7 per cent, respectively. “Dubai’s average apartment prices stood at Dh1,161 per square foot, while average villa prices stood at Dh1,374 per square foot. These average rates for apartments and villas remain below the highs recorded in 2014 by 22 per cent and 4.9 per cent, respectively,” according to CBRE.

In the apartment segment of the market, Jumeirah registered the highest sales rate per square foot at Dh2,310, while in the villa segment of the market, Palm Jumeirah registered the highest sales rate per square foot at Dh3,802, the CBRE report said.

— muzaffarrizvi@khaleejtimes.com

KEY TAKEAWAYS FOR DUBAI REAL ESTATE

9.5%

Increase in average prices in the year to November 2022

27.3%

Increase in average rents in the year to November 2022

Apartment segment

Dh1,161

Average apartment price per square foot

Source: CBRE’s Dubai Residential Market Snapshot – December 2022