Even as rents in Dubai increased around 10 per cent in the first half of this year, another similar percentage jump is expected in the second half of this year, industry executives said.
Rents have been steadily rising in Dubai after the pandemic on the back of an increase in population, inflow of high-net-worth individuals and expansion of the economy creating new jobs in the market.
“With a 10 per cent increase at the beginning of 2024, there is no reason to think that we won’t see a similar growth for the remainder of the year. With more handovers due in third and fourth quarters, we anticipate continued supply and steady growth of 5-10 per cent over the next six months,” said Jacob Bramley, senior leasing manager at Betterhomes.
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Lewis Allsopp, chairman of Allsopp and Allsopp, projected that the second half of 2024 and 2025 will likely see a shift towards a more steady and gradual rental growth.
“More supply will be coming into the market, with over 10,000 expected in Q2 alone. The increase in supply is crucial as we expect to see further population growth. Over 30,000 new residents moved into the city in the first five months of 2024. A new report suggests over 6,700 millionaires to enter the city, further fuelling both the population and the real estate market’s growth. As the number of residents continues to climb, we will see more units being handed over to meet the expected rising demand. Landlords are also offering flexible payment options such as multiple cheques, which would help tenants keep pace with the rising market,” added Allsopp.
H1 2024 performance
So far in H1 2024, Allsopp said average rents across the city have seen a 15.7 per cent increase compared to the same period in 2023. Apartments and townhouses both saw an average increase of just below 15 per cent while villas recorded an average increase of 18 per cent.
The average increase includes units and areas that may have been below the market average up until the updated Rera Index was implemented in March this year. The updated calculator is likely to have brought previously undervalued units closer to the market average, thus contributing to the overall rental increases.
According to data shared by property brokerage firm Betterhomes, the average price of rental contracts increased by 8 per cent in the first half of 2023 and another 8 per cent in the second half of last year.
Where rents rose Dh150,000 in a year
According to Allsopp & Allsopp data, areas that witnessed the highest increases in first half of 2024 were Jumeirah Beach Residence (JBR), Town Square, Dubai Production City, Dubai Healthcare City 2 and Meydan, which all saw a 21 to 22 per cent jump in rentals.
Additionally, Dubai South’s average rents increased by about 38 per cent compared to H1 last year, aligning with the expected increase in demand following the announcement of the new Al Maktoum Airport earlier this year.
“In luxury communities such as Jumeirah Islands, average rents saw a 43 per cent increase as rental prices reached Dh500,000 in H1 2024 compared to Dh350,000 last year. Similarly, Al Barari saw the average rental price increase from about Dh300,000 last year to approximately Dh400,000 in H1 this year, which is a 39 per cent increase in average rents,” said Allsopp.
Bramley said some of the strongest performers in H1 2024 were Tilal Al Ghaf where rents grew by 21 per cent, Dubai Hills Estate (14 per cent), The Villa Project (12 per cent), and Dubai Creek Harbour (11 per cent), all experiencing an increase of over 10 per cent in average rental price per square foot.
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source: khaleejtimes
