Rents in Dubai increased a staggering 27.2 per cent in Q3 of this year compared to 2022, with a year-on-year increase of more than 38 per cent for villa rents and more than 19 per cent for apartments.
Rentals stand at the highest level they have been in quite some time, which has led to a change to the calculations of both existing and prospective tenants. For the former, it makes more sense to renew existing contracts at a mutually agreed rate with landlords than to seek out a new tenancy.
And new tenants may need to reassess which communities or buildings align with their rental budgets. That hasn’t resulted in any loss of momentum for the city’s rental market, with transactions up by 22 per cent compared to Q3 last year. And as my own rental team can confirm, there is a very healthy appetite for high-value rentals in Dubai.
Multi-million dirham rentals
It was less than two years ago when the rise in rentals priced at Dh1 million was considered newsworthy. For rents to hit seven figures on a consistent basis was a rarity. Now, it is very much the norm, and the trend is for rents priced at over Dh5 million, or roughly $1.5 million.
In 2022, our company set a record in the city with a 6-month rental for Dh4 million. We’ve surpassed ourselves this year with three of the highest rental transactions in the city –Dh7.8 million and Dh6.1 million on Palm Jumeirah, and Dh6.8 million in Emirates Hills. The simple fact is that there are plenty of HNWI tenants who are more than willing to match the pricing in prime communities if the property fits their needs.
That, ultimately, is the key. The right property commands the right price, and Dubai finds itself in an extremely privileged position right now where some of the most expensive properties on the market are just right.
Residential hotspots for prime rentals
There are certain areas of Dubai that have always been popular for rentals – Downtown Dubai and Dubai Marina, unsurprisingly, continue to dominate in terms of demand. Palm Jumeirah, which was sliding into the affordable luxury space pre-Covid, has now become one of the most sought-after for high-end rentals.
What is most intriguing to me, however, is that Dubai Hills Estate sits as the fourth most in-demand community for rentals, surging well past many established neighbourhoods. It’s especially notable as the prices in Dubai Hills are a bit higher than comparable villa or townhouse communities. This once again demonstrates that paying more is not a problem for tenants when the property is right for them.
Jumeirah Islands is another community that both buyers and tenants have had their eyes on lately – Kyle Giusti, a private client advisor from our rental team, set a new record last year with the most expensive rental ever recorded in Jumeirah Islands at Dh1.2 million. He has already surpassed that record this year at Dh3.3 million and has two more listings in the area that priced in a similar range.
With all of the upgrades that have been done, on individual homes and at a community level, Jumeirah Islands is fast becoming a prime waterfront rental area.
Prospects for landlords
As Dubai continues to attract new residents from every corner of the globe and its most prime communities continue to garner strong demand, tenants will need to expand their horizons when searching for homes to rent. But this also means that tenants who are seeking high-end rentals will have a wider pool of options to choose from.
Could we see rents flattening out over time? Of course – the market cannot grow without limits. But landlords are now in an unprecedented position in terms of the rent that they can ask and realistically achieve, which will keep the city’s rental graph on an upward incline for a while to come.