Khaleej Times, Wednesday, Dec 14, 2022 | Jamadi Al Awwal 20, 1444
Dubai: Rental market records 27.3% increase this year
Emirates:
The Dubai rental market sustained strong double-digit growth this year in line
with the real estate sector that continued its golden run throughout the year
due to high demand from the investors and end users following drastic visa and
business reforms.
Latest data released by CBRE indicated that average asking rents rose by 27.3
per cent in the year to November 2022, with average apartment rents increasing
by 27.6 per cent and average villa rents surging by 25.4 per cent, respectively.
“As of November 2022, the average annual apartment and villa rents stood at
Dh93,359 and Dh278,546, respectively. Palm Jumeirah registered the highest
average annual apartment and villa rents, where asking rents reached an average
of Dh243,219 and Dh982,047, respectively,” according to CBRE’s Dubai Residential
Market Snapshot – December 2022.
Record activity in 2022
Taimur Khan, head of research for Mena at CBRE in Dubai, activity levels in
Dubai’s residential market have reached record mark in the year-to-date to
November 2022 with total transactions volume reaching 81,919, surpassing record
highs of full year 2009, when transaction numbers totalled 81,182.
“This strong level of activity has continued to support increases in average
prices, which for apartments and villas have risen by nine per cent and 12.7 per
cent in the 12 months to November 2022, respectively. However, we are seeing the
rate of average price growth slowing, particularly in the villa market, a trend
which we expect the apartment market to follow suit in the short run,” Khan said
in a statement to Khaleej Times on Tuesday.
He said certain prime markets will continue to record strong growth rates. In
the rental market, he said average rents are continuing to grow at near record
highs. “In response, tenants seem more likely to renew existing tenancies. That
has been portrayed through Ejari data, which shows that the number of new
contracts registered year-on-year in the year to date to November 2022 dropped
by 5.8 per cent, whereas renewals increased by 33.8 per cent,” he said.
Investors rush to Dubai
Ata Shobeiry, chief executive of Zoom Property, said 2022 is proved a remarkable
year for Dubai real estate market as investors flocked to the emirate following
the government’s successful strategy to overcome Covid-19 pandemic.
“With more people selecting Dubai as their second home, the demand for rental
properties is witnessing a spike. This has resulted in a significant increase in
rental prices. For landlords, it's certainly a good sign, but tenants are
reluctant to change accommodation due to an increase in rent,” Shobeiry told
Khaleej Times.
“As Dubai is all set to welcome more visitors in 2023, the average property rent
is expected to increase further,” he said.
He said popular areas in Dubai continue to attract tenants, as they drive the
rental market. “While Business Bay, Downtown Dubai, and Al Barsha remain the
preferred choices of tenants, it's Palm Jumeriah that has reported the highest
increase in the average rent,” he said.
Ayman Youssef, vice-president, Coldwell Banker UAE, the rental market graph this
year has witnessed a considerable upward spike with rents increasing across all
property segments. “The growth yield has increased to 6.5 per cent, up from 5.7
per cent last year. The rental market continues to hold strong without any signs
of cooling down on the short term. So far, the market has been able to absorb
the additional supply of units with healthy occupancy rate specially in prime
areas,” he said.
November a record month
CBRE data showed that Dubai’s total transaction volumes stood at 10,505 in
November, reflecting an increase of 60.8 per cent compared to the previous year.
This strong growth was supported by a 63.3 per cent rise in off-plan
transactions and a 58.4 per cent rise in secondary market deals.
“In the year to date to November 2022, a total of 81,919 residential
transactions have been recorded, surpassing the record highs registered in 2009
over the same period,” according to CBRE’s Dubai Residential Market Snapshot –
December 2022.
In the 12 months to November 2022, average prices increased by 9.5 per cent.
Over this period, average apartment and villa prices increased by nine per cent
and 12.7 per cent, respectively. “Dubai’s average apartment prices stood at
Dh1,161 per square foot, while average villa prices stood at Dh1,374 per square
foot. These average rates for apartments and villas remain below the highs
recorded in 2014 by 22 per cent and 4.9 per cent, respectively,” according to
CBRE.
In the apartment segment of the market, Jumeirah registered the highest sales
rate per square foot at Dh2,310, while in the villa segment of the market, Palm
Jumeirah registered the highest sales rate per square foot at Dh3,802, the CBRE
report said.
KEY TAKEAWAYS FOR DUBAI REAL ESTATE
9.5%
Increase in average prices in the year to November 2022
27.3%
Increase in average rents in the year to November 2022
Apartment segment
Dh1,161
Average apartment price per square foot
Dh2,310
Highest average apartment price per square foot in Dubai in Jumeirah
Dh93k
Average annual rent for an apartment in Dubai
Dh243k
Highest average annual rent in Dubai in Palm Jumeirah
Villa segment
Dh1,374
Average villa price per square foot in Dubai
Dh3,802
Highest average villa price per square foot in Dubai in Palm Jumeirah
Dh297k
Average annual rent for a villa in Dubai
Dh982k
Highest average annual villa rent in Dubai in Palm Jumeirah