More Residents Turning to Homeownership as Rent Prices Soar, Experts Say
The constant rise in rent prices has motivated a growing number of residents in Dubai to consider buying their own homes, according to industry experts. During the first half of 2023, high-end areas in the city continued to experience a surge in rental rates, with some popular neighborhoods facing a shortage of available properties, pushing more people towards ownership.
Industry executives have noted a strong demand for villas, leading to significant rent increases, particularly for luxury villas, which saw a spike of up to 70% between January and June. Affordable apartments in sought-after districts also experienced rental growth of up to 17%, while luxury apartment rentals appreciated by up to 32%.
In the villa segment, rents in popular neighborhoods jumped by up to 50%, while the cost of renting luxury villa properties increased by as much as 70%. This imbalance between supply and demand has resulted in traditionally popular areas becoming increasingly expensive, driving more individuals to consider homeownership as a long-term investment.
Haider Ali Khan, CEO of Bayut and head of EMPG Mena, emphasized the impact of rising rental prices on the market dynamics, stating,
"The constant increase in rental prices has also prompted more people to take the plunge into homeownership, so the money they are allocating towards real estate ends up creating an asset in the long term."
According to Taimur Khan, head of research for the CBRE,
average rents in Dubai have seen a significant growth of 22.8% in the year leading up to June 2023. During the same period, average asking rents for apartments and villas rose by 22.7% and 23.1%, respectively.
Here's a rental guide courtesy of the CBRE:
Areas where apartment rents rose in June
- Green Community (DIP)
- Dubai Marina
Areas where apartment rents fell in June
- Jebel Ali
- Palm Jumeirah
- Living Legends
- Discovery Gardens
Areas where villa rents rose in June
- The Villa
- The Meadows
- Emirates Hills
Areas where villa rents dropped in June
- Al Furjan
- Victory Heights
- Arabian Ranches
Bayut's data reveals that prospective tenants in Dubai have shown a preference for more affordable areas like Jumeirah Village Circle, Bur Dubai, Al Nahda, Deira, and International City. Rents in these areas have experienced an increase ranging from six to 16 percent.
In the luxury property segment, Business Bay, Downtown, Dubai Hills Estate, and Palm Jumeirah have emerged as the most sought-after areas among tenants.
When it comes to villas, Damac Hills 2, Al Barsha, Arabian Ranches 3, Mirdif, Dubai South, Jumeirah Village Circle, and Dubailand have dominated the preferences of tenants in 2023.
News Source: Khaleej Times