Dubai real estate rents to climb 20% this year, investors eye returns: analyst
The real estate market in Dubai has witnessed a significant increase in rental prices, and analysts predict that they may continue to rise even higher in the year 2024.
Forecasts from property experts at Colife suggest that Dubai real estate rents may experience a potential increase of up to 20 percent in the current year, driven by the pursuit of both long-term and short-term returns by investors. The initial half of 2023 witnessed a substantial annual surge of nearly 23 percent in rental prices. Projections for the year’s end hint at an expected growth of around 30 percent.
Dubai rent prices soaring
Anticipating the year 2024, an expert in Dubai’s real estate management sector predicts that this upward trajectory in rental prices is likely to continue.
Ilnara Muzafyarova, Head of Colife, said: “We have analysed the numbers, and since the start of this year, long-term rental prices have increased by 27 per cent.
“There was a spike of up to 30 per cent for short-term rentals in October when the low season ended and the high season began.
“Interestingly, this summer, despite being milder than last year’s scorching heat, didn’t see the usual drop in rental demand.
“For 2024, we’re forecasting a 20 per cent jump in short-term rentals (up to 6 months) compared to 2023, and a 15 per cent rise for long-term ones (over 6 months).
“We predict an organic growth in the real estate market, reflected in rising property values, the number of high-rise buildings being put into operation, and a surge in property transactions.
“The increase in rental costs is directly tied to apartment price hikes. For example, from mid-2022 to mid-2023, apartment prices rose by 15 per cent.
“And it’s not just about higher prices; the number of transactions is also on the rise. In 2022, Dubai saw over 30,000 properties changing hands, with an anticipated 50,000 in 2023.
“Investors buy apartments and then rent them out to generate passive income.
“The demand for rentals remains consistently high, both for short and long-term stays. However, the majority of clients who secure apartments through our service, are planning to call them home for more than six months and even a full year”.
Colife shared details of a one-bedroom unit located in Dubai Marina, which was recently leased to tenants and currently generates a monthly income of $2,970 for its owner.
This is a 21.2 per cent increase compared to the rental value of similar properties a year ago.
According to Colife’s forecast for 2024, the owner can expect an even more substantial monthly income, around $3,415.
An increasing number of professionals from all over the world continue to move to Dubai for work, inevitably influencing the rise in rental prices.
These experts are drawn by career opportunities, competitive salaries, quality of life, and the warm climate.
As of July 2023, the population of Dubai, according to the Dubai Statistical Centre, has reached 3,604,030 people, compared to 3,515,264 in July 2022. The city’s Development Master Plan outlines a projection for the population to expand to 5.8 million by 2040. The continuous growth is attributed to the influx of new professionals, leading to an escalating demand for residential properties. Colife analysis suggests that this population growth and increased demand are contributing factors to the ongoing rise in rental prices, with no indications of this upward trend slowing down in 2024.