There are further indications that rent rises in Dubai are beginning to drive up prices, even in places where they had remained largely steady for the majority of the previous 22 months. Rates in the Deira neighbourhood, which has several rental alternatives, increased by 4.4% in September. As a result, a typical larger two-bedroom apartment might now bring in between Dh60,000 and Dh70,000 for the landlord.
In fact, according to data from the real estate firm CBRE, Deira came in second for the biggest rental growth during September, only behind Arjan, another popular neighbourhood for families earning mid- to upper-mid incomes, whose growth totalled 4.7%. (According to CBRE, the typical rent in Arjan was close to Dh45,000).
In Dubai as a whole, gains in September were 2.5%, showing clearly that there have been no signs of a slowdown in rent increases. The most affluent areas of the city, Palm Jumeirah, Jumeirah, and Downtown Dubai, had gains of 3.8%, 4.1%, and 3.5% throughout the month. The other renowned premium destination, Dubai Marina, increased by 2.6%.
In the emirate, rent increases have exceeded 26% over the past 12 months that ended in September.
Affordable locations feel the pull
Estate professionals claim that the rises seen in Deira and Arjan should not be unexpected. More new structures, like those in the Deira Enrichment Project, have been occupied in Deira and the surrounding areas, attracting tenants who are willing to pay higher rents. Since then, this has spread to older structures where landlords have been successful in bringing in renovations or high-quality enhancements. “Deira still offers residents more affordable rental options, and a lot of newcomers to Dubai are setting up homes there,” the agent added.
Arjan’s gaining
Arjan is now among the more sought-after destinations to relocate to as a result of the increased delivery of homes there at surprisingly low rental rates. There is a wide range of price possibilities available because it is also a site where many owners of recently delivered homes are testing the rental market. According to market sources, Arjan may experience double-digit rate increases in the upcoming 10 to 12 months.
Bur Dubai rents
It’s interesting to note that rentals in Bur Dubai, another of Dubai’s favourite legacy neighbourhoods, increased by just 1.3% in September, with CBRE estimating the average rent for a moderately sized apartment to be Dh63,800. As part of Dubai’s Urban Master Plan 2040, Bur Dubai will undergo significant renovations soon, but for the time being, the number of new structures entering the market is very small.
Will Silicon Oasis see the next big spike?
One of the top destinations for young families or single people looking for studio or one-bedroom alternatives continues to be Dubai Silicon Oasis. According to CBRE, the cluster experienced a gain of 2.2% for an average of Dh48,518 last month. Similar to Arjan, market feedback indicates that Silicon Oasis rents may also see more significant increases in the closing weeks of 2022.
“Rentals in Silicon Oasis – and not just on residential – are gradually heading towards pre-Covid levels. Perhaps, by April-June 2023, they will be at those levels.”– Sailesh Israni, CEO of Sun & Sand Developers