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The average cost of renting apartments and villas in Dubai continued to show strong growth in the first quarter of 2023, especially in higher-quality residential complexes, with quarterly increases of 4% and 7%, respectively.
According to the Asteco report for Q1 2023, the annual rental growth in the villa segment was significant — by 25%, while average rental rates for apartments and offices increased by 19%.
In the first quarter of 2023, approximately 7,600 units of newly commissioned real estate were registered in the Dubai market, which corresponds to the volume registered in the last quarters of 2022. The supply in the villa segment has increased significantly: about 2,150 villas were built, which is more than twice as much (by about 1,000 units) as in the previous quarter, the report data showed.
Despite growing concerns about the volume of future supply, Asteco expects 27,400 apartments and 4,650 villas to be completed by the end of 2023. The compilers of the report also add that villas still remain at the center of demand, which is reflected in higher rental rates and occupancy.
Office rental rates have also increased by an average of 6% over the past three months, although additional incentives may have affected the net actual rental cost. Annual rent growth in this segment was 21%.
The annual increase in prices for apartments and villas was 17% compared to last year, but nevertheless, the price growth for the quarter still showed relatively high rates of 3% and 5% for apartments and villas, respectively.
With so many forces operating in the market, Asteco expects that the strong momentum they have set for development will continue throughout 2023, although it is likely to occur at a steadier pace than in 2022.
