The Dubai real estate market is experiencing an unprecedented surge as tenants rush to become homeowners amid skyrocketing rental prices. According to the latest market report by Allsopp & Allsopp, the leading real estate agency in Dubai, the rental prices for apartments and villas have seen an average increase of 24.3% and 16.5%, respectively, during the first half of 2023 compared to the same period the previous year. However, this average does not capture the true extent of the rental surge, as established residential communities and premium waterfront locations have witnessed hikes ranging from 40% to a staggering 80%, forcing many tenants to reconsider their living arrangements.
With no signs of rental prices coming down in the near future, an increasing number of tenants are taking control of their financial futures and opting to invest in property rather than remaining in a heated rental market. Lewis Allsopp, CEO of Allsopp & Allsopp, reported a remarkable 39% increase in new rental contracts and a staggering 68% rise in new rental tenant applications in the first half of 2023, compared to the same period in the previous year.
As monthly rents outpace equivalent mortgage payments, more tenants are recognizing the value in paying towards a property they can own, along with the potential for capital appreciation. The trend of tenants turning into prospective homebuyers is further adding to the already high demand for properties in Dubai, resulting in an undersupply of available homes for the growing city population. The market is expected to witness a 10-15% increase in average sales prices by the end of the year, as the influx of first-time homebuyers continues to reshape Dubai’s real estate landscape.
