Dubai is a popular city known for its luxurious lifestyle, world-class infrastructure, and stunning skyscrapers. Over the past year, we have seen a significant increase in rents across the city, which has left many of our clients wondering why this is happening. In this blog, we will explain the reasons behind the rise in rents in Dubai and what you can expect in the future.

A significant reason for the increase in rents is the strong demand for rental homes. One trigger was the early reopening of Dubai during the pandemic, far ahead of Europe and Asia. It welcomed tourists, remote workers, and businesspeople. Many of these international visitors decided to stay which led to an increase in demand for rental properties. Moreover, many Russians have moved to Dubai since the start of the Ukraine conflict. Additionally, the government of Dubai has introduced new visa options for remote workers, investors, and entrepreneurs, which has led to an influx of expats to the city. 90% of residents in Dubai are expats.

Many high-net-worth foreign recent arrivals have chosen to buy villas and condos for their own residential use. The prices and volume of the sales market have increased almost as fast as rents leading many landlords to choose to sell their former rental properties to take advantage. Many would-be buyers have been priced out of the sales market keeping them in competition with renters.

Supply of rentals properties, especially villas and townhouses, is very low. Construction did slow during the pandemic and new deliveries have struggled to keep pace with demand. The current vacancy rate is at 8%, which is the lowest in 15-years. Several thousand new housing units are in planning and construction, but it will likely take between 12-24 months for that stock to be available to ease the supply crisis.

While the government has set regulations to limit rent increases, some property owners are finding ways to bypass these rules and some districts are exempt from regulation. We have heard of landlords asking for much larger increases than allowed and of landlords breaking leases to sell or to re-rent on the open market at a much higher rate.

In conclusion, the increase in rents in Dubai is due to a combination of factors, including an influx of investors, new visa options, rising sales prices, low supply, and high demand. As the demand for rental properties remains high, we can expect rents to continue to rise in the short term. However, with new stock expected to come onto the market within the next two years, we may see some relief in the future.

If you need the latest housing data for Dubai contact us today. We work with many clients on strategies for these high cost locations. We follow a rigorous set of research and analysis steps when developing host housing budgets, saving you time and ensuring that your budgets are realistic and competitive. We also provide you with access to dedicated housing experts who proactively and promptly support your housing needs.


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