Dubai rent prices up 22% in 2023
by admin on September 7, 2023Dubai rent prices rose 22.0% in the year through July 2023. Over this period, average apartment rents increased by 21.9%, and average villa rents rose 22.6%.
Photo Credit: Thomas Saito
Rent prices continue to increase in Dubai mid-2023. While this trend may not be welcomed by tenants looking for more affordable housing options, it presents a unique opportunity for investors to capitalize on the extraordinary momentum in the residential market.
According to a CBRE report, in July 2023, the number of transactions on Dubai’s residential market was up 53.4% compared to the same month in the previous year, with the total volume of transactions reaching 10,080. The overall transaction volumes reached 67,818, compared to the previous year, the highest total ever recorded over this period.
Dubai witnessed a substantial surge in its average residential property prices, marking an 18.1% increase in the period to July 2023. Additionally, during this timeframe, average apartment prices surged by 18.5%, while villa prices saw a substantial increase of 16.2%.
According to a report by the real estate consultancy CBRE, as of the end of May, the average rents in Dubai experienced a remarkable 24.2% growth over a 12-month span. Interestingly, this rent surge doesn’t appear to have slowed down significantly, even in areas where new properties were delivered in the year-to-date. Estimates indicate that approximately 15,000-18,000 new homes became available for occupation by end-users and tenants within the same period this year.
Significant imbalance between supply and demand
A market analyst has suggested that it might require the delivery of another 50,000-60,000 homes to make a substantial impact and effectively slow down the ongoing rental increases in Dubai. However, it is unlikely that this will actually happen. According to consensus among industry sources, an estimated 25,000-30,000 additional homes will be ready for occupancy by the end of this year. While this is a significant number, it may not be sufficient to put a brake on rent hikes, given the persistent demand from newcomers who are choosing to establish residency in Dubai. The dynamic nature of Dubai’s real estate market and its continued attractiveness to investors and residents alike present a complex challenge in achieving a balance between supply and demand.
Why it is a good idea to invest now
The rising rent prices in Dubai in mid-2023 may pose challenges for tenants, but they come with tremendous opportunities for savvy investors. While investors can benefit from high rental yields and property appreciation, tenants may need to adapt to the evolving market conditions by exploring negotiation opportunities and alternative housing options. And why not, consider buying instead of renting, as long as it makes financial sense for them and if the possibility aligns with their residency in the UAE and future plans.
High Rental Yields: The increasing rent prices translate into higher rental yields for property investors. With a strong demand for housing in Dubai, investors can expect a steady stream of rental income, potentially yielding attractive returns on their investments.
In addition to rental income, property values are likely to appreciate over time. The scarcity of available properties, coupled with Dubai’s economic resilience, makes real estate an appealing long-term investment.
At Arabian Sunrise Properties, we strive to offer our clients the finest market alternatives tailored to their needs. We boast with a carefully curated portfolio of property, coupled with stellar counseling from our sales agents. Don’t hesitate to call and set up a meeting with one of our consultants!
