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UAE Real Estate: Dubai Market to Stabilize5 min read

Author: Derya Bandak
Managing Partner Attorney at German Law

Dubai’s rental market has experienced significant growth in recent years, marking the end of a negative cycle from mid-2015 to late 2021. This growth is characterized by a surge in rents and activity, indicating a renewed vigor in the emirate’s real estate sector. The market is segmenting significantly, particularly concerning new and renewed lease agreements.

Data from the Dubai Land Department shows a 43.5% increase in the total number of tenancy contracts registered in the year leading up to July 2023 compared to the same period in 2019. Average rents have increased by an impressive 22.0% over the year, with apartments and villas experiencing heightened demand.

However, there is a notable fragmentation within the rental market, with tenants increasingly opting to renew their leases rather than seek new accommodations. This trend has created a divergence between new and renewed rental rates, with new rental rates surpassing those of renewed contracts.

Analysts show that premiums for new rental contracts are 20.1% higher than renewed contracts in the apartment segment. In contrast, the villa segment has seen sustained demand, with premiums for new villa rental contracts currently standing at 25.2%.

How TME Services Can Support You

The Dubai rental market is expected to stabilize or decrease gradually as the market finds equilibrium. However, in the villa segment, the undersupply is anticipated to sustain premiums soon, with a gradual moderation expected in the long run. It is essential to recognize the dynamics at play and make informed decisions in navigating the evolving landscape of Dubai’s real estate sector.

At TME Services, we specialize in facilitating the smooth transition of German companies into the Middle Eastern market, and our team of 45 experts is ready to help your business. With over 18 years of experience in the UAE and the Middle East, we specialize in legal, tax, accounting, and compliance matters. Visit our services page to learn more about everything we do.

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