Factors Driving the Rising Rental Prices in Dubai

Dubai rents are on the rise again as occupancy levels hit 5-year highs.

Average rents in Dubai have increased by 3.6% in the first quarter of 2019, according to new data from Asteco.

This is the second consecutive quarter of rental growth in the city, following increases of 2.9% in the fourth quarter of 2018 and 1.7% in the third quarter.

The latest figures take the average rent in Dubai to AED 109,000 (US$29,700) per year.

The increases come as occupancy levels in Dubai hit 5-year highs, with 97% of apartments and 96% of villas and townhouses occupied in the first quarter of 2019.

With demand for rental properties increasing and supply remaining tight, we are likely to see further increases in rents over the coming months.

5 Others Factors Driving Rental Prices in Dubai

1. The Expo 2020 Effect

The impending Expo 2020 has seen a renewed interest in the Dubai property market, with many looking to buy or rent in Dubai ahead of the world fair.

Expo 2020 is expected to bring in 25 million visitors to the UAE during its 6-month run, from 20 October 2020 to 10 April 2021.

The resulting demand for accommodation is likely to increase rental prices in Dubai.

2. The Economic Downturn

The current economic downturn in Dubai is likely to be one of the driving forces behind the increase in rental prices.

The downturn is caused by a slowdown in the construction industry, which has led to a reduction in the number of new homes being built.

This, in turn, has led to an increase in the demand for rental properties, as people are forced to rent rather than buy.

3. The Population Boom

Dubai’s population is growing at an unprecedented rate, with an estimated 2.6 million people expected to move to the city by 2025.

This population boom is likely to increase the demand for rental properties, as people look for places to live.

4. The Weak Dirham

The weak dirham is another factor that is likely to be driving up rental prices in Dubai.

The dirham has been weakening against the US dollar for some time, and this is likely to continue in the future.

As a result, Dubai’s rental prices are likely to increase, as they are pegged to the dollar.

5. The Mortgage Cap

The mortgage cap is another factor that is likely to be driving up rental prices in Dubai.

The mortgage cap was introduced in 2014, and it limits the amount that people can borrow to buy a property.

This has led to an increase in the demand for rental properties, as people are unable to buy their own homes.

Conclusion

The Dubai real estate market is currently experiencing a period of strong growth, with rents rising and occupancy levels hitting five-year highs. This is good news for landlords and investors, but it may mean that tenants will have to pay more in rent. Overall, the market is healthy and growing, and it is a good time to invest in Dubai property.

Since 2004, Dacha Real Estate has been the top property agency in Dubai, specializing in selling and renting luxury properties. Our world-class services adhere to a single guiding principle: to make business transactions as simple as possible for our clients. Contact our Dubai real estate team now!