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by Arabnews.com — RIYADH: 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.