Earlier this year, the Real Estate Regulatory Authority (RERA) updated its Rental Index, resulting in a notable rise in Dubai rents of up to 15%.
According to Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core, “The RERA rental index update reflects the current rental increases, with most districts experiencing hikes between 8 to 15 percent. We’ve observed a higher number of lease renewals compared to new leases, as tenants are opting to stay put due to the higher costs of new agreements.”
In the second quarter of 2024, rents have surged by 19% year-over-year, representing 64% of the rise observed since the pre-COVID-19 quarter of Q1 2020. This consistent increase over the past 14 quarters has led to a higher renewal rate among tenants.
The rise in villa rents during Q2 2024 varied by category: affordable villas saw a 21% increase, mainstream villas rose by 12%, and prime district villas experienced a modest 1% increase. For apartments, rents jumped by 27% in the affordable segment, 19% in the mainstream segment, and 14% in prime locations. These trends are detailed in a recent Cushman & Wakefield Core report.
Conversely, the secondary residential sales market and villa rentals are showing signs of stabilization as transaction volumes plateau. “City-wide villa rents have stabilized with a 13% increase year-over-year, while apartment rents have surged by 22% compared to the same period last year. Renewals have increased by 14% in Q2 2024,” Gurrapu added.
The prime market, which experienced sharp increases earlier in the market cycle (2022-2023), is now stabilizing. Meanwhile, mid-market and affordable districts are rebounding from historically lower levels.
