Dubai rents expected to increase by 20% in 2024
Dubai's prime residential neighborhoods are expected to witness an up to 20% increase in rental rates in 2024, following an impressive rise between 23% and 30% over the past year.
Industry specialists attribute this ongoing strong performance to several factors, including heightened investor interest, an influx of skilled professionals, population growth, and Dubai's escalating status as a preferred destination for affluent individuals.
The experts note that as long as the pace of new residents moving to Dubai outstrips the rate of new housing availability, the pressure on rent prices will likely continue upward. The direction of rent prices in 2024 may also be influenced by a shift in resident preferences towards purchasing homes over renting, and the continuing allure of real estate as a lucrative investment.
The first half of 2023 saw a significant 23% annual increase in rental rates, with projections pointing to a 30% rise by year-end, as observed by Ilnara Muzafyarova, the head of Colife, a real estate management company. Muzafyarova anticipates a 20% surge in short-term rental prices (up to six months) compared to 2023, with a 15% increase for rentals longer than six months. This expectation is underpinned by a 15% climb in apartment prices from mid-2022 to mid-2023.
In November 2023, S&P forecasted a 5.0% to 7.0% rise in house prices during 2024. Tatiana Leskova, an associate director at S&P, mentioned no signs of slowing down in Dubai's real estate market for the year.
CBRE, a real estate consultancy, indicated that Dubai's rental rates have surged by approximately 42% since January 2020, with house prices going up by 33%. Similarly, villa rents have seen a rise, averaging $88,400 per year, a 19.2% increase noted in November.
The upward trend in rent mirrors the dynamism of Dubai's real estate sector, with property values climbing in tandem with the burgeoning high-rise buildings and increasing property transactions.
Colife reported a 21.2% rise in monthly income to $2,970 over the past year for one-bedroom unit owners in Dubai Marina. They anticipate an increase to around $3,415 per month in 2024.
Real estate experts foresee continued demand for residential spaces in Dubai, fueled by the steady arrival of global professionals and ongoing population growth.
Asteco, a real estate consultancy, observed a slowing growth rate in Dubai's rental market in the third quarter, with rental gains at 3.0%, 2.0%, and 4.0% for apartments, villas, and offices, respectively. Annually, these rates stood at 18%, 19%, and 29%.
Property Finder's data from November highlighted one-bedroom apartments as the most sought-after, with 36% of searches. Two-bedroom apartments and studios were next, with 30% and 24% respectively. In the villa/townhouse segment, three bedrooms were most popular at 42%, followed by four bedrooms and larger. A preference for furnished homes was noted, with 66% of tenants favoring them, while 32% opted for unfurnished.
As of July 2023, Dubai’s population was recorded at 3,604,030, up from 3,515,264 in the previous year. According to the city's Development Master Plan, the population is expected to reach 5.8 million by 2040.