Dubai Real Estate: 2023 Sees Over 20% Surge in Rents

While new rental contracts decrease, renewed registrations experience a 29% surge.

Dubai's real estate market showcases a standout performer in the form of Palm Jumeirah, commanding the highest price points for apartments and villas among distinct categories. According to a recent report by CBRE, rental prices for residential units in Dubai have witnessed a remarkable 22% increase compared to the previous year.

The growth rate for apartment rents during this period reached 21.9%, while villas saw a surge of 22.6%, as highlighted by CBRE's latest findings.

Although the pace of rental price growth slightly eased from the 22.8% recorded in June 2023, the demand in the rental market continued to rise. Taimur Khan, CBRE's Head of Research for the MENA region in Dubai, noted an 8.8% year-on-year growth in rental registrations up to July 2023.

While the number of new rental contracts registered experienced a substantial 12.6% drop, renewed rental registrations soared by an impressive 29%.

Khan projected that due to the ongoing market dynamics—marked by supply constraints and heightened demand—Dubai's rental prices are expected to keep increasing, albeit at a more moderate pace.

Dubai Property Sector Flourishes: Surge in Transactions Fueled by Investor Interest
Dubai's property sector is undergoing a remarkable growth phase, with total residential transaction volumes reaching an impressive 10,080 in July 2023. This substantial year-on-year increase of 53.4% is driven by a surge in off-plan market sales, up by 78.4%, and secondary market sales, which witnessed a 33.8% rise.

This surge in transaction volumes continues to reshape the real estate landscape, with year-to-date transactions up to July 2023 reaching an unprecedented 67,818, setting a new record.

The average prices witnessed an 18.1% surge in the year leading up to July 2023, a rise from the 16.9% growth rate in June.

During this period, apartment prices surged by 18.5%, reaching AED1,320 per square foot, while average villa prices climbed by 16.2%, reaching AED1,552 per square foot.

Despite the surge, average apartment sales rates remain 11.3% below the historic levels of late 2014, while many core and prime submarkets consistently outperformed their 2014 benchmarks. On the other hand, average villa prices have exceeded their 2014 peak by an impressive 7.4%.

Palm Jumeirah Reigns as Most Expensive District
Palm Jumeirah shines as the pinnacle of luxury within the apartment and villa segments, boasting the highest price points. Average sales rates per square foot reached AED2,463 for apartments and an impressive AED4,943 for villas.

However, in terms of rentals, the average annual rent prices for apartments and villas were recorded at AED105,691 and AED319,994, respectively.

The most elevated average annual rents were observed in two prime locations: Palm Jumeirah, where the average asking rent for apartments stood at AED256,785, and Al Barari, where villa rents averaged AED1,094,034.