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Dubai rents to stabilise after record-breaking rises

Rents in Dubai rose astronomically last year Unsplash/Likith T
Rents in Dubai rose astronomically last year

Dubai residential rents are expected to stabilise this year after record-breaking increases in 2022.

Average rents across the Emirate increased by 26.9 percent last year, real estate consultancy firm CBRE reported. Apartment rents were up 27.1 percent, while villas saw a 24.9 percent rise.

Villa rents are 45.3 percent higher than in 2019 due to a lack of stock and growing demand, while apartments are 17.2 percent higher and stand at an average of AED 95,168 ($25,913) per year, Taimur Khan, head of research – Mena at CBRE in Dubai, said.

However, he added that such increases were “certainly not sustainable”.

“I think [this year] will be fragmented,” Khan said. “You’ll still see growth, but it won’t be near as much. I think particularly what you might class as more affordable or secondary areas, we’re likely to see more stability there.”

Khan said that there were almost 541,000 Ejari transactions registered in 2022, up 39.3 percent on pre-Covid figures in 2019.

Ejari is an online registration system initiated by the Real Estate Regulatory Agency (Rera) that requires all rental or lease contracts in Dubai to be recorded at this portal.

The report revealed that, as of December 2022, average annual apartment rents stood at AED95,168, and average villa rents at AED282,150.

Palm Jumeirah recorded the highest average annual apartment and villa rents, reaching an average of AED248,452 and AED1,016,956 per annum, respectively.

While many tenants are resorting to the Rera rental calculator to protect them from such increases, such safeguards do not apply in the Dubai International Financial Centre (DIFC) area of the city, which witnessed a 26.9 percent average increase from November 2021 to November 2022.

Khan said regulatory reform, the launch of various visa initiatives, the popularity of remote working and the “allure of Dubai” in an increasingly uncertain economic and geopolitical world, had combined to create the perfect storm of people choosing to make Dubai their home.

Scott Livermore, chief economist at consultancy Oxford Economics Middle East, said: “The outlook for the economy this year continues to be positive, and this is likely to result [in] continued interest in Dubai, especially given economic challenges faced in other parts of the world. Therefore we expect a positive dynamic to continue in the real estate market. 

“However, as new supply comes on line during 2023, it is likely this will contribute to a gradual moderation in the increase in rents.”

According to the CBRE report, the total volume of transactions in Dubai reached 8,662 in December 2022, a growth of 63 percent from the previous year.

This has been supported by a 92.5 percent increase in off-plan sales and a 35.4 percent jump in secondary sales. 

Over the full year, a record total of 90,881 residential transactions were registered, exceeding the historic record high of 81,182 from 2009.

“Historically Dubai has tended to be a lot more transient, but I think what you’re seeing now is people deciding to buy and they’re buying in areas that they want to effectively live in, which obviously takes that stock off the market in terms of rental stock,” Khan said.