Dubai Rental Market Surge: Rents Up by 15% Following RERA Index Update

Since the Real Estate Regulatory Authority (RERA) Rental Index was updated in March 2024, Dubai’s rental market has seen notable changes:

Overall Rent Increase: Rents have surged by up to 15%, with most districts experiencing hikes between 8% and 15%. According to Prathyusha Gurrapu, Head of Research and Consulting at Cushman & Wakefield Core, “We have seen a higher number of renewals compared to new leases, as tenants opt to stay in their current premises due to higher new lease rates.”

Yearly Comparison: In Q2 2024, rents rose by 19% year-over-year, which accounts for 64% of the increase observed since the pre-Covid-19 period of Q1 2020.
Villa Rent Changes:
- Affordable villas: +21%
- Mainstream villas: +12%
- Prime districts: +1%
Apartment Rent Changes:
- Affordable apartments: +27%
- Mid-range apartments: +19%
- Prime apartments: +14%

This data is consistent with the latest Cushman & Wakefield Core report.

Stabilization: Secondary residential sales and villa rentals are showing signs of moderation, with villa rents increasing by 13% year-over-year, and apartment rents up by 22%.
Renewal Rates: Tenants are renewing leases at a higher rate, with a 14% increase in renewals in Q2 2024.
Market Segments: The prime market, which saw sharp increases in 2022-2023, is now stabilizing. Conversely, mid-market and affordable districts are experiencing a rebound from historically low levels.

Landlord-Friendly Trends: The rental market remains landlord-friendly, though the pace of rent growth has slowed compared to the previous year. “Household incomes are not keeping pace with rising rents, further contracting disposable incomes,” Gurrapu noted.
Villa Rental Increases:
- Jumeirah Village Circle: +40%
- Jumeirah Park: +22%
- The Springs and The Meadows: +14%
Apartment Rental Increases:
- Discovery Gardens: +32%
- Dubai Sports City: +28%
- Dubailand: +24%

Price Trajectory: City-wide sales prices have continued to rise for the 16th consecutive quarter, with a 21% year-on-year increase.
Market Moderation: Prime districts are showing relative moderation in sales price increases, while mainstream and affordable districts are seeing steep rises, affecting affordability.
Off-Plan Sales Prices: Primary off-plan sales prices are generally higher than secondary off-plan prices, though the difference is narrowing. Sellers are adjusting prices to clear inventory, a trend to watch as more off-plan supply enters the market.

Overall, the Dubai real estate market is experiencing significant changes, with varying trends across different segments and districts.