A market report has shown that tenants are increasingly renewing their existing residential leases after two years of rental increases.
The CBRE report suggests that the change may be due to a lack of available stock, particularly in prime residential areas.
Rental growth in Dubai has accelerated this year
Data from the Dubai Land Department revealed that in the year to date to March, the total number of rental registrations stood at 159,941, an increase of 5.8% from the previous year.
This significant growth has been buttressed by a 12.3% growth in renewed rental registrations. At the same time new contracts registered recorded a decline of 4.1%, the CBRE discovered.
“In Dubai, residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year,”
Taimur Khan, head of research for Middle East and North Africa in Dubai at CBRE
As of March, mean apartment prices stood at Dh1,486 per sq ft, and average villa prices reached Dh1,776 per sq ft.
6,526 residential units were delivered in Dubai in the first quarter. 59.7% of this stock being located in Meydan One, Jumeirah Village Circle and Al Furjan, the report showed.
It comes as Meydan launches resort-inspired Naya at District One. Located in the prestigious Mohammed Bin Rashid Al Maktoum City, the new development is managed by Nakheel.
It features three distinctive, green-roof towers comprising spacious one-, two-, three- and four-bedroom apartments. These are located alongside Lagoon Villas that contain private gardens and terraces.
“The UAE’s residential market started the year on a relatively strong note, where the elevated demand levels continue to drive performance.
“The strong levels of activity and high absorption levels, which have reduced available supply, will continue to support price growth in Dubai over the remainder of the year.
“Looking ahead, we expect Dubai’s residential sales market to maintain its upward trajectory. Prices in both the apartment and villa segments of the market will continue to grow, however, not at the same pace.”
Taimur Khan, head of research for Middle East and North Africa in Dubai at CBRE
Retail rents surge
Away from the residential arena, the retail sector is also seeing a surge in rental rates.
During Q1, rents in the UAE capital rose by 14.7% and in Dubai by 10.5%, according to CBRE Middle East.
“The supply-and-demand imbalance in both Abu Dhabi and Dubai continues to drive rental performance.
“We are seeing an increase in the number of global and international retail brands looking to establish or expand in Dubai’s core locations despite the limited availability of stock and elevated occupancy levels.”
CBRE
Within the industrial market, CBRE also noticed ‘robust levels of demand’ in the first quarter of the year.
Average rents in Abu Dhabi and Dubai went up by 5.1% and 14.3%, respectively.
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