In response to skyrocketing rental prices, new residents in Dubai are increasingly opting to purchase properties within their first two years of arrival. The trend is driven by the emirate’s burgeoning population and a desire for long-term stability, which also helps to absorb the influx of new property developments.
Rising Rents and Market Dynamics Rental rates in Dubai surged by up to 31 percent in the first half of 2024 due to strong demand, significantly reducing the availability of properties across both affordable and luxury segments. John Lyons, Managing Director of Espace Real Estate, notes a shift among new residents who initially rent but quickly transition to buying homes. “New residents rent for their first one or two years and then become the next wave of buyers looking to settle here for the long-term,” said Lyons.
Population Growth Fuels Demand Dubai’s population growth continues to drive rental transactions, particularly in new developments. For instance, three new buildings completed in Downtown Dubai in 2023 have already seen over 550 new rental contracts registered in the first half of 2024. High rental prices, coupled with an affordable mortgage market, relaxed visa regulations, and ongoing population growth, are encouraging tenants to pursue homeownership.
Affordability and Investment Appeal Despite the global economic slowdown and rising interest rates, Dubai’s real estate market remains robust. Haider Ali Khan, CEO of Bayut and head of Dubizzle Group Mena, highlighted that Dubai’s real estate sector has become a preferred choice for wealth preservation, with continuous price and consumer interest growth over the past 24 months.
Record Sales and Investment Yields In the first half of 2024, the total sales value reached AED 190.4 billion, marking a 38 percent increase compared to the same period in 2023. The demand spans affordable, mid-tier, and luxury categories, with villa prices rising over 41 percent. Investors are also drawn to high rental yields, with areas like Dubai Investments Park, Discovery Gardens, and Remraam offering yields up to 11 percent. Mid-tier locations such as Dubai Sports City, Dubai Silicon Oasis, and Motor City provide yields surpassing 9 percent, while luxury apartments in Green Community, Al Sufouh, and Damac Hills show returns up to 9 percent.
Outlook for the Future As Dubai continues to grow community by community, the real estate market is poised for sustained growth. The anticipated surge in rental supply in 2025 and 2026, predominantly in the apartment segment, is expected to meet the needs of the increasing population. Lyons predicts that Dubai’s property market will maintain its upward trajectory for many years, driven by strong demand and strategic development.
For those considering a move to Dubai, the current trend suggests that investing in property sooner rather than later could be a wise financial decision in the face of escalating rental rates and ongoing market growth.
Source: Khaleej Times
