Dubai Rent Hikes Show Signs Of Easing As More Tenants Renew Leases

Rents in Dubai are anticipated to keep rising, though at a slower pace, as the market shows signs of stability with more rental listings that stayed the same in the second quarter of this year. Numerous residents renewed their leases during this time, even as rents reached record highs.

Taimur Khan, head of research at CBRE (CB Richard Ellis), explained that in "both the sales and rental markets, we expect that rates will continue to rise. However, we will not see this happen at the same pace, particularly as the market has started showing some signs of stability," Khaleej Times reported.

The emirate has experienced a double-digit increase in rents over the past three years, driven by high demand from new residents moving to Dubai.

In the first half of 2024, 88.1% of sales listings and 73.8% of rental listings in Dubai stayed the same, marking an increase from 79.6% and 72.9%, respectively, in the same period the previous year.

Dubai's residential market is expected to stay strong in the coming months, Khan said during the release of the second-quarter report. After a three-and-a-half-year increase, rental rates and prices are still rising in 2024, especially in high-end areas due to the arrival of wealthy individuals in Dubai.

"The rate at which rents continue to grow remained unwavering, where average residential rents grew by 21.1% in the year to June 2024, driven by a 22.2% growth in average apartment rents and a 12.7% increase in average villa rents," Khan noted.

"As of June 2024, the average apartment and villa rents stood at Dh127,969 and Dh354,512 per annum, respectively," he said.

The highest annual rents for apartments and villas were in Palm Jumeirah, averaging Dh279,826, and in Al Barari, averaging Dh1,344,844, according to the data for the January to June period.

According to the Dubai Land Department, 299,564 rental contracts were registered in the year's first half, marking a 52.5% increase from 2019, and a 5.8% increase from the same period in 2023.

Khan explained that the year-on-year increase is mainly due to an 11.9% rise in renewed contracts, while new registrations dropped by 3.7%. Tenants are choosing to renew their current leases instead of renting new units, which would likely be much more expensive.