Dubai rents: Tenants pay up to 30% more for new leases compared to renewals

Tenants in Dubai are paying up to 30 per cent more for new leases compared to renewals as demand from residents looking for new homes remains high, experts said.

The Real Estate Regulatory Authority’s (Rera) Rental Index — which was last updated in March 2024 — has helped narrow the gap between new leases and renewal rates. However, new rental prices are still higher, said Ayman Youssef, managing director of Coldwell Banker.

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"On average, new leases are reportedly trading at a premium of 20 to 30 per cent compared to renewal rates, depending on the area and demand for specific property types. The recalibration has minimised excessive disparities while ensuring market competitiveness,” said Youssef.

Dubai will soon unveil a new smart rental index that is expected to enhance transparency and provide accurate and up-to-date data to support decision-making for investors, landlords, and tenants.

A notable trend in the third quarter of 2024 was the continued increase in tenant renewals, which rose by 16 per cent, said Prathyusha Gurrapu, head of research and consulting at Cushman and Wakefield Core.

“The new Rera rental calculator has helped narrow the gap between new and renewed rental rates; however, new leases are still trading at an average premium of 14 per cent over renewals,” said Gurrapu.

According to Cushman and Wakefield Core, rents across Dubai increased by 18 per cent year on year in Q3 2024, marking the 15th consecutive quarter of hikes.

With the updated Rera calculator, landlords won't be able to impose unreasonable increases beyond the thresholds stipulated, Youssef said.

“By aligning renewal rates more closely with market benchmarks, the calculator has helped create a more balanced rental landscape, particularly in areas where disparities previously existed,” he added.

Areas with highest premiums

Beachfront communities, such as Palm Jumeirah and Bluewaters Island, have seen some of the highest premiums on new leases due to their luxury lifestyle offerings and iconic locations, Youssef said.

“Similarly, gated villa communities like Emirates Living, Dubai Hills Estate, and District One have witnessed significant demand, driven by families seeking larger spaces and privacy. Fully developed prime communities, such as Downtown Dubai and Business Bay, have also experienced very healthy demand, as their central locations and premium amenities continue to attract tenants willing to pay a premium for convenience and lifestyle,” the expert added.

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