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Since the beginning of 2022, housing rents have increased in nearly all districts of Dubai, with the exception of Arjan, Bur Dubai, and Liwan. During the same period, the average rent rose by more than 13% in March. This is the highest monthly growth rate recorded in the last seven years.
Industry experts connect rent increases with an influx of foreign workforce into Dubai. This is the result of the business relocation of many companies after the country's successful fight against the Covid-19 pandemic. This is evident through information released by the Dubai Statistics Center (DSC) last week. The results showed that the population of the Emirates exceeded 3.5 million people.
How does rent change?
According to the CBRE report for the first quarter of 2022, in March 2022, the average apartment rent increased by 11.7%, and the average villa rent rose by 22.5% during the reporting period, reaching AED 80,000 and AED 238,441 a year, respectively. The most expensive annual apartment rent is found on the Palm Jumeirah. It is AED 197,482 a month. The most expensive villas are in Al Barari, with requested average rents of AED 801,940.
Where has the rent for apartments and villas changed the most?
A report by a real estate consulting company showed that Business Bay had the largest increase in apartment rents by 4.9%. It is followed by International City with 4.2% growth, Dubai Marina and Damak Hills (Akoya) with a 4.1% increase, and Old Town (4.1%). Dubailand Residence, Green Community (DIP), The Views, Dubai Silicon Oasis, and The Greens are five districts with the lowest rental increases.
In the apartment segment, rental rates dropped drastically in the Arjan (-0.4%), Bur Dubai (-0.6%) and Liwan (-0.9%) districts. In the villa segment, rents have declined in the Jumeirah Park, Deira, Reem, and Al Furjan communities. The decline in these areas varied from 0.4% to 1.9%.
Market experts think that rental payments will continue to grow by about 20% a year in the medium and affordable segments. However, the market will consolidate in the luxury segment as rents have already peaked in the last 18 months. This is the result of the following factors. First, Expo-2020 ended. So, demand connected with the Expo died away. In addition, Covid-19 restrictions have been loosened in the UAE and around the world. Thus, travel restrictions have eased around the world. While many people will be entering the country to get a new job or to start a business, others are leaving. That is the reason why the luxury real estate market will consolidate.
Why is demand still high? The reason is that the UAE has faced an exceptional growth in issuing new business licenses. This results in an influx of foreign workers into the Emirates. Large businesses relocate to Dubai after the pandemic. Positive changes will continue to attract many new residents to Dubai.
The demand for office rentals has also been quite high for the last three months. The Class A office rents has increased by 30-40%. Companies relocating to Dubai are creating this rush. Originally, demand has started with villas and townhouses. But now, according to real estate agencies, there is such a strong trend in all sectors.
