Arab News, Sat, Oct 07, 2023 | Rabi Al-Awwal 22, 1445
Dubai’s rentals on the rise, tenancy contracts up 43.5% in 4 years: CBRE
Emirates:
Dubai’s residential rental market has experienced an upswing in activity
over the past two years, ending a negative growth cycle that persisted from
mid-2015 until late 2021, according to real estate services firm CBRE.
In its latest report, the company disclosed that
in the year-to-date figures up to July 2023, there was a 43.5 percent increase
in the total number of tenancy contracts, reaching 325,727, compared to the
agreements recorded during the same period in 2019.
The analysis examined about 703,000
residential rental transactions between January 2018 and July 2023, including
apartments and villas.
The report highlights a growing divergence between
new and renewed rental rates as current market conditions compel tenants to
remain in their residences.
The data also presents a comprehensive analysis of
recent trends in new and existing leases and offers insights into the future
direction of Dubai’s housing market.
According to the figures, average apartment rental
costs have reached their highest levels since February 2017, as villa fees have
also surged exponentially.
However, the market is undergoing significant
fragmentation. The report highlights a 12.6 percent drop in the total number of
new contracts registered, contrasted by a 29 percent growth in renewed lease
signups.
This suggests renters are becoming less inclined
to relocate due to the additional costs associated with acquiring new leases,
particularly in prime and core residential areas.
Many tenants are also capitalizing on the
protection provided by the Real Estate Regulatory Agency rental regulations.
These directives aim to limit annual increases to a maximum of 20.0 percent, and
achieving the highest permissible rate is rare in most cases.
Taimur Khan, head of research at CBRE, commented
on the findings: “The surge in demand has substantially altered the dynamics of
Dubai’s residential rental market. In this landlord-favored market, new rental
contracts can command significant premiums compared to renewed contracts.”
He added: “While this trend is starting to wane in
the apartment segment as affordability limits are tested and renewals catch up
with market rents, the villa segment continues to experience a significant
disparity between demand and supply, ensuring that premiums in this segment are
likely to remain elevated for an extended period.”
Dubai’s evolving rental landscape is driven by
many factors, including robust demand, regulatory measures, and an overall shift
in tenant preferences.