One of the factors that has been attributed to the anticipated increase in rentals in the subsequent year is the ongoing influx of professionals from different parts of the world coming to Dubai for work and lifestyle and the current rise in property prices in the emirate.
Investors and property owners in Dubai can expect another good year in 2025 and beyond as the rentals in short-term and long-term stays in the city are expected to rise by an average of 18 per cent and over 13 per cent respectively. This information is as per the industry stake-holders.
There will be an influx of working professionals due to globalization and many people moving to the city for lifestyle reasons and this together with high property prices in the emirate will contribute to the increase in the rentals turrning over for the expected period.
The expected overall increase in rentals, further, is expected to enhance the existing demand for residential real estate in Dubai by end users from other nationalities as they try to bring out maximal returns from their investments through passive income streams.
“In analyzing actual transactional data and the present-day market condition, we predict an 18 percent growth in short-term rentals and 13 percent growth in long-term rentals in 2025,” said Nina Novikova, Chief Business Development Officer at Colife Dubai, an international real estate and rental services company comprising Colife.
In the same vein, Parag Bharat Parekh, Chief Executive Officer, PropertyPro Real Estate who is an expert in Dubai’s property services industry gave the forecast that in 2025, rental prices would surge to almost 25 percent increase in specific regions due to current trends and high demand.
Dubai’s rents are projected to increase by 20 percent in 2024 – further improvements expected next year. Analysts predict that rental prices will rise by approximately 20% by the end of 2024 and this upward trend will persist into the following year.
For the first six months of this year, the increase in rental rates has been between 11-16% on average.
“The data we have indicates that rental rates have escalated by 16 on average since the start of this year,” said a senior executive with Colife Dubai.
There are seasonal fluctuations in rent rates, with a high during peak months and low summer rent rates when the season is off, she elucidated.
Novikova explained that Dubai’s real estate sector is poised for further natural expansion, as evidenced by appreciation in property prices, construction of more new towers and active selling and letting of properties.
“Rental prices are on the rise and this is due to the property prices increase,” she noted.
As per Bayut’s data on transactions in Dubai, which are based on the processed information of the Dubai Land Department (DLD), there were more than 48,000 property sale transactions recorded in Q3 2024 valued at over 32.67 billion US Dollars or more than AED 120 billion.
Some participants in the industry indicated that the available housing units in the market wil be enhanced by another 182,000 units in 2025-2026 due to the completion of a number of units that were pre-sold in 2022-2023.
From this, it can be implied that around 76000 units are likely to be ready by the year twenty twenty five.
In connection to her argument, Novikova added that with the increased cost of housing, many investors are going for higher priced investment properties and renting these out for an income.
“Issues of rental demand are always on the rise for tenants both for short rentals and long rentals”, she noted.
Expatriates and tourists contribute to the increased demand for rental apartments
Industry stakeholders mentioned that the anticipated increase in rental rates is due to the fact that Dubai is still expanding as a center of business and leisure more than ever before.
Such patterns of high demand and rental rates in the local rental market have been attributed to the high number of residents and their visitors, the industry players observed.
According to Parekh, a number of reasons explain the expected 18 percent rise in short-term rental prices, one of which encompasses the constant expansion of tourist and business enterprises in the case of Dubai attracting more and more people and businesses from all corners of the globe, as well as the ever-increasing number of people preferring to work and live in such locations, more so professional and IT experts.
“Many polymodal activities, such as various exhibitions and expos in Dubai, have further increased the demand for short-term rental property in the country, thereby resulting in an upward shift in the pricing curve,” the PropertyPro Real Estate chief executive stated that during this particular period of exhibitions and expos, price in Downtown for a one bedroom apartment surpasses AED 10, 000 per night for premium apartments.
Colife Dubai’s Novikova noted that while one would pay AED 10,700 per month for a Jumeirah Lakes Towers (JLT) one bedroom apartment from Colife on 3 months course rental, the same unit would go for as low as AED 9,500 in a year’s long rental.
“More and more foreign professionals are coming to Dubai because of the job offers, good salaries, high standards of living and pleasant weather, and this naturally affects the market for asked-for properties for rent,” she explained.
Long-term rentals however, according to Parekh of PropertyPro, the projected 13 percent increase is due to the population growth and urbanization trends that have characterized Dubai since the pandemic.
Market trends, according to industry insiders, can help lessees leverage on negotiations for leases.
When it comes to investors, such estimations provide them with both new prospects and difficulties, they reasoned.
According to them, increasing rental rates shall also present opportunities to the investors in developing projects for both, the short-term and long-term rental users.
Nonetheless, experts in the sector indicated that rental income would be affected by external factors such as economic climate, government policies and changes in demand.
