Rental prices in Dubai to experience a surge in 2023
by admin on July 31, 2023The surge in rental prices in Dubai’s real estate market during 2023 has been driven by a mix of economic recovery, limited supply, attractive government policies, and the city’s appealing lifestyle. Tenants and landlords alike must adapt to this evolving landscape to make the most of the opportunities presented.
Rental prices surge in Dubai for villas and apartments alike
Tenants in Dubai who hoped for a slowdown in rental increases during the second half of 2023 may find their wishes unmet. Recent data from the real estate consultancy CBRE revealed that average rental prices across Dubai surged by 24.2% over a 12-month period, indicating the persistence of the upward trend. Which is good news for both current and potential investors alike.
Even in areas where new properties were delivered in the year-to-date, there was little respite in the rent increases. It’s estimated that approximately 15,000-18,000 new homes were made available for occupation by end-users and tenants in 2023.
In the rental market, average rents have increased by 25.8% between Q1 2022 and Q1 2023. Average apartment rents have grown by 25.7%, and villa rents have increased by 26.1%. In April 2023, the average annual rent for an apartment stood at USD27,978, while for a villa, it was USD83,997.
More people are moving to Dubai, which translates into increased demand for property to rent.
Despite the influx of new properties, the rental market continues to face significant demand, particularly as more newcomers settle in Dubai. Market analysts believe that an additional 25,000-30,000 homes will be ready for occupancy by the year-end. However, this supply may not be enough to significantly slow down the rental hikes.
Experts suggest that an influx of 50,000-60,000 new homes delivered within the next 12 months could potentially make a noticeable impact on rental rates. Nevertheless, the consensus among industry sources is that the current supply of new homes may not suffice to meet the growing demand and curb the ongoing surge in rental prices.
With the economic rebound, attractive government policies, and Dubai’s enduring appeal as a global city, the rental market remains highly competitive for tenants. As such, tenants should be prepared for the possibility of a continued rental price surge in Dubai in the foreseeable future. To navigate this challenging rental landscape, tenants may consider exploring alternative neighborhoods or negotiating with landlords to secure the best possible rental terms.
From an investor’s perspective, the present surge in Dubai’s rental market signifies a promising sign, indicating sustained interest in property investments. And for potential buyers considering making this move, the current rental surge serves as an encouraging signal, motivating them to take the logical step of becoming a property owner in one of the world’s most business-prone cities.
How much did rental prices surge in Dubai?
In the rental market, average rents have surged by 25.8% between Q1 2022 and Q1 2023. Average apartment rents have grown by 25.7%, and villa rents have increased by 26.1%. In April 2023, the average annual rent for an apartment stood at USD27,978, while for a villa, it was USD83,997.
Both established and emerging residential areas in Dubai have experienced significant double-digit increases in rental rates and property values. A notable example is Dubai South, a mega mixed-use destination that witnessed steady rental and property values in 2021 while other established locations, such as Marina, Downtown, and the Palm, started to surge.
The highest average annual rents for apartments and villas were found in Palm Jumeirah, with average rents reaching USD 71,824, and in Al Barari, with average rents reaching USD 274,533.
“Additionally, the majority of villa communities and over 72.7% of apartment communities monitored by CBRE have surpassed their 2019 price levels.” said Taimur Khan, Head of Research – MENA at CBRE in Dubai,, “The rental market has started to stabilize, as the growth rate has decreased for the third consecutive month. Average rents have increased by 25.8% in the year leading up to April 2023, down from 26.3% in the previous month.”
