Apartment rents increased by 6% over Q2 2023, according to a new industry report
Rental rates across Dubai are showing possible signs that they are reaching a ceiling, even as the average apartment and villa rents continued to increase in the second quarter of 2023. Recording upticks of 6% and 3%, the two segments reached highs of 21% and 23%, respectively, in the first half of the year.
Findings from a new report by property management and real estate services company Asteco noted that almost 11,000 residential units were delivered in Q2 2023, with apartments accounting for 9,400 units of this stock.
Although rental rates continued to grow in 2023, market indicators point towards a rent ceiling.
The report cited the difference between listings and contracted rates, as recorded by the Dubai Land Department (DLD), as a key indicator of a ceiling, and stated that apartment and villa units were often renting at the lower end of the range, even though they were not advertised as such.
The report further stated the pace of increase has slowed within some communities and asset classes, particularly within the villa segment. Areas such as Meydan, Arabian Ranches 3, and Al Furjan saw minimal rental growth due to increased supply in Q2 2023.
Neighbourhoods that recorded the largest jump in rents in Q2 2023 included Downtown Dubai, the Palm Jumeirah and Dubai Marina. Downtown Dubai recorded a year-on-year jump from AED 75,000 to AED 160,000 for one-bedroom rental units, followed by a jump from AED 110,000 to AED 240,000 for two-bedroom rentals and a steep climb from AED 160,000 to AED 400,000 for the three-bedroom spaces.
Additionally, popular residential communities such as Dubai Silicon Oasis, particularly the Cedre Villas, along with Al Waha and Layan Villas, Jumeirah Beach Residence (JBR), and The Greens and Views experienced above-average rent increases due to limited availability and tenant movement.
Similarly, communities such as the Palm Jumeirah, Jumeirah Village Circle and The Springs saw the highest year-on-year increase in villa rentals. A five-bedroom villa on the Palm Jumeirah, which would have averaged AED 650,000 last year is now commanding a rental price of AED 1.1 million.
The report indicated the sales price growth also appeared to be slowing with increases of 2% for apartments, 3% for villas and 4% for offices in Q2 2023.