The United Arab Emirates has made a decision about the prices of rentals for the upcoming period.
In 2024, rents in Dubai will continue to increase, albeit at a slower rate, as a result of the undersupply of housing on the market as well as the influx of international professionals and investors into the city.
In spite of this, there will be a number of handovers in some communities, such as Jumeirah Village Circle (JVC) and Tilal Al Ghaf, in the coming year. This will provide tenants with additional options and give landlords in the surrounding neighbourhoods a run for their money.
High rental prices in the UAE
According to Jacob Bramley, the leasing manager at Betterhomes, "I see rents continuing to rise at a more measured rate than what we have seen over the course of the last two years as they continue to rise." Despite the fact that we are receiving a significant amount of inquiries and listings, there is still a shortage of available real estate. This situation is expected to last until the fourth quarter. The amount of residences that will be handed over in the following year, which will in turn offer competition on prices, is what leads me to believe that price hikes would not be as dramatic as I had anticipated.
Slowdown in the rental market
As of the third quarter, the Dubai rental market has experienced a steady deceleration in growth rate, as reported by Asteco, a real estate consultancy.
According to Asteco, "certain averages have remained static, despite the fact that there has been activity in both lower and upper rental rate brackets."
Over the course of the past three months, there has been "a definite slowdown" in addition to rental gains of three percent, two percent, and four percent for flats, villas, and offices respectively. "On an annual scale, the changes stood at 18 percent, 19 percent, and 29 percent, respectively," stated Asteco. There were three different percentages of change.
According to Bramley, the demand for homes throughout the city is continuing to skyrocket, which has resulted in a dearth of properties that are now empty. This results into minimal to no long vacant periods for landlords, which is a sign that the rental market is robust and prospering.
When do rents increase at a faster rate?
The neighbourhoods of Dubai Marina, Jumeirah Village Circle (JVC), Business Bay, Downtown Dubai, and Jumeirah Lake Towers (JLT) are the most frequently selected locations for apartment buildings, according to Cherif Sleiman, chief revenue officer of Property Finder. Dubai Hills Estate, Damac Hills 2, Al Barsha, Jumeirah, and Damac Hills are the most popular neighbourhoods for individuals looking to purchase villas.
In the coming years, it is anticipated that these regions would fetch higher rental growth because to the significant demand and popularity that they currently possess.
Number of people looking for apartments in the Emirates
Data from Property Finder for the month of November revealed that flats with one bedroom were experiencing the highest demand. About thirty-six percent of people were discovered to be looking for apartments with one bedroom, thirty-six percent were looking for apartments with two bedrooms, and twenty-four percent were looking for studio flats. About forty-two percent of people looking for villas or townhouses were looking for three bedrooms, while thirty-five percent were looking for four bedrooms or greater alternatives. Sixty-six percent of tenants favoured residences that were equipped, while thirty-two percent chose homes that were unfurnished. According to Sleiman, 51% of people looking for villas or townhouses were interested in unfurnished listings, while 48% were interested in furnished offerings.
Additionally, according to Sleiman, new initiatives in communities that have not been explored before are anticipated to bring in other possibilities that will assist in maintaining the increased demand.
Jacob Bramley believes that the new supply in JVC, Cherrywoods, and Tilal Al Ghaf will result in more competition for landlords in the surrounding districts. This will be accomplished by providing tenants with additional options that were not available in the past.
If the rate of increased net migration continues to be higher than the rate at which new dwellings are handed over, then this will continue to put upward pressure on rental costs. It is possible that we will observe patterns of inhabitants in Dubai choosing to own rather than rent. In the event that a greater proportion of the population chooses to purchase their property rather than rent it for an extended period of time, and if there is a shift in the perception of real estate as an appealing investment opportunity, this might also determine rentals in the year 2024, he stated.
