The robust demand for residential rentals persists due to Dubai’s economic expansion and the presence of a thriving expatriate workforce.
An expert informed Arabian Business that there is an anticipation of a slowdown in rental growth within the Dubai real estate market in 2024. This is attributed to the substantial influx of new properties slated to enter the market, as mentioned by Swapnil Pillai, Associate Director of Research at Savills Middle East. Pillai stated that the completion and turnover of over 20,000 new residential units are expected in Dubai throughout 2024, following the introduction of more than 47,000 new units last year.
“More than 50 percent of the new projects introduced were primarily concentrated in Dubai South East, which is expected to constrain significant price increases throughout the city,” he mentioned.
“There is a likelihood of a moderation in rental growth in specific peripheral areas of the city due to the substantial upcoming supply,” he added.
Nevertheless, Pillai does not anticipate a decline in rents. Instead, he anticipates that rental prices will “stabilize” as the influx of new properties contributes to improving the overall housing supply. The demand for residential rentals remains strong, driven by Dubai’s economic growth and the expatriate workforce.
“There is an increasing demand for high-end residential properties across Dubai,” he noted.
In the city, the number of transactions for units priced above AED10 million reached a total of 3,788, showing a 63 percent year-on-year growth. A two-tier market is developing, with well-established areas experiencing continued demand for luxury developments.
Savills Middle East forecasts a 5 percent growth in the UAE economy for the year 2024. The nation’s GDP is now predominantly driven by non-oil sectors, comprising 73 percent, thereby strengthening the resilience of the private sector. Additionally, ongoing mega-infrastructure projects persist in fueling economic activity.
Luxury homes boom in Dubai
Regarding sales, Pillai mentioned a 63 percent increase in luxury residential property transactions in Dubai last year. Well-established areas continue to experience robust demand, and new luxury developments are also showing strong performance.
Rental growth appears likely in both the office and industrial property markets. Savills predicts a 20 percent increase in prime office rents this year, given that Grade A vacancy rates stay below 5 percent. There’s also a possibility of slight tightening in logistics yields due to expected interest rate cuts.
Despite challenges in the global economic landscape, the real estate sector in the Middle East is expected to stay strong. This resilience is supported by government initiatives aimed at stimulating non-oil growth sectors, which are crucial for economic diversification.
