By Ishrath Jaigirdar
Dubai, UAE
A further increase in real estate prices and rents in Dubai could increase rent-related inflation, said a top real estate expert. The emirate witnessed over 30,000 transactions in Q2, 2023 resulting in sales value of Dh91 billion, growing by 35 percent in the corresponding period last year, that reflects strong demand for properties. According to Dubai Land Department, Dubai’s real estate saw transactions worth Dh283 billion (US$77 billion) in H1 2023, which is more than three times the total value of the land and property transactions of Dh81.03 billion recorded in 2019.
According to CBRE’s mid-yearly report, the excessive demand for houses has aggravated the supply shortage. This has inevitably set the price to grow, although at a slow pace.
CBRE’s head of research, Taimur Khan, said in an interview with Gulf Property, “From a general perspective, the Dubai market shows no sign of slowing in the near future. Due to the demand-supply imbalance, prices and rents will evidently rise, albeit at a slower rate”
When asked about the possibility of market stability, Khan predicted that Downtown and Palm Jumeirah will see some leveling out occurring. The influx of demand and more moderate supply levels, particularly in the prime segment of the market means that we are likely to see price growth continue, although it will slow compared to current rates.
Dubai is the top global market for luxury properties. As per Knight Frank’s report, 92 homes worth at least US$10 million each were being sold during the first quarter of 2023. The city overtook Hong Kong and New York which recorded 67 and 58 respectively.
CBRE’s report further announced that the total volume of transactions in H1 2023, increased by 43.3 percent compared a year. The demand surge propelled significant price rise.
In another CBRE analysis, the average rental growth rose by 22 percent for the year until July. According to DLD, total lease contracts registered reached 279,064 in the first half., up 7.5 percent year-on-year. Khan pointed out that rents are also growing in secondary and affordable locations, although given the nature of these communities, we are likely to see this maintain for as long as we have seen in prime communities to date.
Mid-range estates like Sports City and Living Legends witnessed 2.6 and 3 percent rise respectively across apartments in July. Khan also affirmed that the rise will continue to increase in the next year. Therefore, tenants will have to ensure ways to maintain their budget.
While prices will grow at a steady pace, which will allow investors to plan ahead of time, tenants will have to be alert for inconsistent rent inflation.
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