According to a recent analysis by property consultancy Cushman & Wakefield. There is a noteworthy difference between new lease agreements and lease renewals in Dubai’s real estate landscape. It indicates a unique two-tiered rental market. The research clarifies the underlying causes of this pattern and the larger forces influencing Dubai’s rental market.
● Tenant Preference for Extensions of Lease
Due to a large discrepancy in rental increases compared to signing new leases, many renters opt to remain in their existing homes during lease renewals. Tenants may enjoy a more regulated and predictable environment thanks to the Real Estate Regulatory Agency’s rental calculator, which controls these renewal hikes.
● Trends in Sector-Specific Rents
The Cushman & Wakefield Head of Research and Consultancy, Prathyusha Gurrapu, emphasised the rental market’s sector-specific patterns. Villa rentals increased by 16% annually, outpacing a 17% increase from their 2014 high prices. In contrast, apartments had a more notable rise of 19% year over year, staying 2% below their high values in 2014.
● Prognosis for 2024
The research predicts sustained increases for new leases in 2024 despite the slowdown in rental hikes, especially in established core areas where intense occupancy levels put upward pressure on rent. On the other hand, rental hikes should be mild because there will be more property deliveries in recently turned-over districts.
● Resilience of the UAE Real Estate Market
The research highlights the robust recovery of the UAE real estate sector and credits general economic growth and government measures. Property sales in Dubai and Abu Dhabi were both strong in the previous year, and in 2024, market values are predicted to keep rising.
● Trends in Rentals for 2023
Data provided by Better Homes indicates that in 2023, apartment rents in Dubai climbed by 20% to 30%. While inexpensive apartment complexes like Discovery Gardens, Dubailand, Dubai Sports City, and Jumeirah Village Circle had the most significant rental increases, average villa rentals increased by 10% to 20%.
● Crucial Developers and Transitions
In 2023, Emaar held a dominant position in the market, with 26% of all handovers. Azizi emerged as the second-largest developer by handovers, surpassing Damac (8%) with a 15% stake. About 65,000 units are scheduled for handover by 2024; significant deliveries are anticipated in Meydan One, Business Bay, and Downtown Dubai.
Even with the 20% yearly increase in apartment sales prices, they were still a little over 6% below their high levels in 2014.
To put the epidemic in perspective, the research notes that prices for apartments have climbed by 32% and villas by 68%.
● Moderating Market Conditions by 2024
While the report acknowledges the possibility of ongoing market moderation in 2024, it emphasises elements that may support the secondary sales market and restrain increases in sales prices, such as restricted post-handover payment plans in the off-plan market and possible interest rate adjustments later in the year.
There are a variety of trends in Dubai’s real estate market, including preferences for property ownership, rental dynamics, and developer handovers. The study gives stakeholders a thorough grasp of current trends and future estimates by offering insightful information about the elements influencing the real estate industry in the emirate.