Driven by the surge in spending, tenants are opting to own apartments instead of renting
Dubai’s scorching rental market continues to surge, witnessing a remarkable 19% price increase during the second quarter of 2023 compared to the previous year. The upsurge was especially pronounced for one- and three-bedroom apartments, which saw rental rates soaring by 20.5% and 22.2%, respectively, as revealed by Property Finder’s Market Watch Q2 2023 data.
The sought-after residential community of Jumeirah Lakes Towers (JLT) experienced the steepest average rent price hike, with two-bedroom apartments witnessing an impressive 33% increase, reaching AED 120,000 in Q2 2023, up from AED 90,000 in the same period last year.
Despite these escalating prices, Dubai Marina, Downtown Dubai, and Business Bay remained the top choices for apartment rentals in Q2 2023, even after reporting significant price surges. For instance, the rent for a three-bedroom apartment in Dubai Marina averaged AED 240,000 in the third quarter of this year, marking a noticeable rise from AED 200,000 in Q2 2022. Similarly, Downtown Dubai saw rents spiking to AED 370,000 for a three-bedroom space, compared to AED 300,000 the previous year.
Villas were not exempt from the rental surge, witnessing an impressive average increase of 25.5% in Dubai during the second quarter compared to Q2 2022, according to Property Finder’s asking price data. The average rental price for a three-bedroom villa rose by 30%, while four-bedroom villas experienced a substantial 35.1% hike. Areas like Dubai Hills Estate, Damac Hills 2, Al Barsha, Jumeirah, and Damac Hills emerged as the top choices for renters seeking villas.
Moreover, rental contracts in Q2 2023 also experienced a significant year-on-year increase of 6%, with 131,293 contracts compared to 123,856 contracts in Q2 2022. Interestingly, tenants showed a growing preference for homeownership over renting, driven by the surge in the average market value for rentals.
The data further revealed a noteworthy rise in off-plan transactions and sustained momentum in the sales of existing properties, accompanied by an overall growth in value across Dubai and Abu Dhabi. In Dubai, the market value for sales transactions recorded its highest-ever gains for a quarter, reaching a staggering AED 90.75 billion compared to AED 58.96 billion in Q2 2022, marking a remarkable increase of 53.93% and signaling a strong demand for housing amidst robust economic growth.
Similarly, off-plan sales values reached unprecedented heights, with transactions amounting to AED 35.06 billion in Q2 2023 compared to AED 18.34 billion in Q2 2022, recording an astounding 91.18% increase. Ready sales transactions also witnessed a significant upswing, reaching AED 55.7 billion in comparison to AED 40.6 billion in Q2 2022, marking an increase of 37.11%.
Abu Dhabi followed suit with a similar upward trajectory, with off-plan sales transaction value in Q2 2023 contributing to 71.9% of the total sales transactions value compared to 58.7% in Q2 2022, reaching AED 4.704 billion compared to AED 2.157 billion.
However, the average rental prices in Abu Dhabi in Q2 2023 saw a slight decrease of 1.3% compared to Q2 2022, with only Khalifa City and Al Khalidiya experiencing a rise in average rent prices for in-demand areas.