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The market driven by factors such as strong demand and economic expansion, as per the latest report by Harbor Real Estate
February 18, 2025 | Staff Reporter | UAE | Brokerage
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Dubai’s residential and commercial rental real estate market continued its growth trajectory in 2024, with notable price increases across several areas. This upward trend was driven by strong demand, continuous population growth, economic expansion, and a rising number of businesses and commercial licenses. These factors have positively impacted the retail and commercial space sectors, further reinforcing Dubai’s position as a thriving business hub.
The number of residential lease contracts grew by 2.5%, reaching 535,194 contracts by the end of 2024, compared to 522,627 contracts in 2023. Rental prices saw an increase across all unit types, ranging from 3.6% for four-bedroom units to 17% for studio apartments. One-bedroom units recorded a 15% increase, two-bedroom units rose by 11.8%, three-bedroom units by 8.6%, and five-bedroom units saw a 10% growth.
On the commercial side, the sector recorded over 237,000 lease contracts, with a total value of AED 25 billion. The average contract value stood at AED 103,000, with an average rental rate of AED 162 per square foot. Mohand Alwadiya, CEO of Harbor Real Estate, said, “Harbor Real Estate’s report offers an in-depth and insightful analysis of Dubai’s rental market performance in 2024 and its broader impact on the real estate and economic landscape. Without a doubt, this sector is expected to sustain its strong momentum in the coming years, remaining a key driver of growth in the emirate’s property market.” He further added, “This resilience is further reinforced by the continuous influx of expatriates and professionals seeking to establish their homes and businesses in Dubai, whether through residential or commercial leasing.”
Based on the report, the key factors supporting the continued growth of the rental sector include:
1. Increasing demand from middle-income earners and newcomers to Dubai: This segment constitutes a significant portion of the population. With each new wave of expatriates, the demand for rental housing continues to rise.
2. The vital role of rentals in the commercial and hospitality sectors: As businesses expand and tourism flourishes, the demand for office spaces, retail outlets, and serviced apartments remains strong.
3. The direct connection between rental yields and property prices: Rental returns significantly influence investor decisions. Higher yields make property purchases more attractive, contributing to price stability and market growth.
4. Urban planning and future visions: Dubai’s Urban Plan 2040, along with strategic initiatives and the Dubai Real Estate Strategy 2033, collectively enhance sustainability and attract more residents and investors.
5. Legislative and regulatory advancements: The presence of the Smart Rent Index, the Rental Dispute Resolution Center, and building classification systems contribute to greater transparency, making Dubai’s real estate market more appealing for investment.
Top Areas for Rental Prices and Lease Contracts
Villas & Townhouses: Jumeirah Bay Island recorded the highest villa rental prices in Dubai, averaging AED 343 per sq. ft., followed by Palm Jumeirah at AED 233 per sq. ft. Other notable areas included Al Markadh (AED 169 per sq. ft.) and Mohammed Bin Rashid City (AED 153 per sq. ft.).
Residential Apartments: Jumeirah Bay Island topped apartment rental prices, with AED 455 per sq. ft. Bluewaters Island followed with AED 267 per sq. ft., while Dubai Harbour averaged AED 195 per sq. ft.
Top Areas for Lease Contracts: Deira led the residential market with 47,928 contracts, followed by Bur Dubai (44,496) and Al Nahda (23,684). Deira also dominated the commercial leasing market with 85,723 contracts.
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