The rental market in Dubai has witnessed notable increases in recent months, particularly in budget-friendly areas located farther from the city’s central residential districts. According to real estate consultancy CBRE, Jebel Ali experienced a 4% rise in rents in November, while demand for apartments in Motor City led to a 2.6% increase. Similarly, the Green Community in Dubai Investments Park saw an average increase of 4.5% in new lease agreements during the same period. These trends reflect residents, both existing and new, seeking more affordable options as they strive to manage their rental expenses effectively.
This shift in rental dynamics began to gain momentum in September, driven by tenants unable to renew their leases at pricier properties, prompting them to explore more budget-friendly alternatives further away from the city center. Many are also eager to secure two-year lease agreements to lock in their rents. Consequently, areas like Jebel Ali and Dubai South have experienced rental hikes, a trend expected to continue into 2023, particularly with the additional demand generated by the Expo City.
One notable exception to this trend is Jumeirah Village Circle (JVC), where rent increases in November were modest at just 0.9%. Despite this, two-bedroom apartments in JVC are still available for less than Dh60,000, showcasing relative stability in rentals attributed to a consistent influx of new handovers in JVC and neighboring areas like Al Furjan and Meydan. However, this equilibrium could shift if new project completions and handovers slow down.
Overall, rental growth in Dubai ranged between 15% and 35% throughout 2022, with luxury neighborhoods experiencing the most significant increases in the first nine months of the year. However, by November, growth had slowed in some areas, including Jumeirah, Dubai Marina, and JBR, while other areas like The Old Town and Downtown Dubai saw notable increases.
Looking ahead, there is a possibility that rental increases could moderate if more landlords transition their units from short-term to annual leases. This potential shift could alleviate pressure on rental rates, particularly in locations like Dubai Marina and Downtown.
For tenants still in search of rental homes, there are opportunities to minimize expenses. Some landlords are offering end-of-year reductions of up to 5%, along with a two-month rent-free period for tenants who decide and sign contracts by December 31, 2022. Additionally, tenants can explore rentals farther from the city center and may still secure one- or two-month rent-free leases, depending on the area and property.
As Seventh Key, a #certifiedrealtors in Dubai, we are committed to assisting you in navigating the rental market and finding the perfect properties to invest in or call home. Contact us today to learn more about the current rental trends and how we can help you secure your ideal rental property in Dubai.