Dubai’s real estate market remains an enticing investment destination due to anticipated rises in both rental rates and property prices, driven by economic resilience, population growth, and business initiatives.
Dubai’s property market has exhibited robust resilience over recent years and continues to be an attractive investment destination, as indicated by experts at ValuStrat, Allsopp & Allsopp, and Betterhomes.
Factors such as population growth, infrastructure development, and government initiatives are bolstering its sustained strength, according to their assessment.
Anticipated Rise in Dubai Apartment Rents for 2024
ValuStrat analysts report a 20 percent increase in capital values across the Emirate in the past year alone. Apartments experienced gains of 14 percent, while villas rose by 23 percent annually. Projections indicate further price increases by 5-7 percent in 2024.
“Recently, the demand trend has shifted towards more affordable areas as buyers seek lower price points and opportunities for potential future investment appreciation. These areas include Discovery Gardens, Dubai Silicon Oasis, Jumeirah Village, Business Bay, The Greens, and Dubai Production City,” noted an analyst at ValuStrat.
Regarding rents, residential rents surged by 27 percent YoY in Q3 2023, with an average gross yield of 8.6 percent.
“In 2024, apartment rents could continue to rise, especially for new contracts, and existing tenants might experience increases in annual renewals due to updates in the RERA rental calculator. Villa rents have begun stabilizing, reaching potential price ceilings as buyers pursue more affordable options. This trend is anticipated to persist in early 2024,” added the analyst.
Arabian Business recently reported that this is due to the impact of increased demand outweighing supply in the emirate.
Expo 2020 Dubai’s ‘positive impact’ continues to attract investors
In addition to this, Dubai’s strategic location and business-friendly environment have helped solidify its position as a global hub over the long term. Its adept handling of the pandemic through restrictive measures boosted confidence.
“The positive impact of Expo 2020, albeit over 2 years back, is still prevalent in the property market, with Expo City now launched, and many events held at the site, including COP28 last year. It continues to give the country a well-deserved PR boost for investors,” noted Matthew Gregory, Branch Director at Betterhomes.
Gregory added that the government’s 2040 urban master plan seeks to expand the population considerably to almost 8 million residents over the coming decades.
“Ongoing and planned infrastructure projects, such as Dubai Metro expansions and new developments, enhance connectivity and elevate the overall appeal of the real estate market,” he said, adding that the market continues to provide “competitive” rental yields, especially in key areas.
Gregory also highlighted Dubai’s high quality of life with world-class amenities and a safe, tolerant culture that make the emirate an attractive place to live and work, along with sustainable frameworks also align investments with global trends.
While prices have risen, property within luxury sectors stays fairly affordable compared to global cities.
“Despite recent price inflation over the last few years, the luxury real estate sector in Dubai remains relatively more affordable than in major global cities. This provides an advantageous entry point for investors looking for long-term appreciation,” Gregory said.
Dubai’s Tax Advantages Make Property Investment Attractive
According to Lewis Allsopp, the CEO of Allsopp & Allsopp Group, tax advantages make property investment appealing.
“You can benefit from tax-free rental income and capital gains when you eventually sell the property. By simply purchasing a property and renting it out, you gain steady income from rent payments while also seeing the property appreciate in value over time,” he said, adding that the city you invest in is also important to consider.
“Targeting a city that has a steady growing market means your property is more likely to continue increasing in value at a high rate. Just as valuable is investing in an area with strong population growth projections for the next three to five years. A growing population drives higher demand for housing, keeping rental occupancy rates high. It also leads to more companies and jobs moving to the city, fueling further population increases. This consistent population growth sustains price appreciation in the local real estate market well into the future,” Allsopp added.
Publish Date: 10 Jan 2024
Source: https://www.arabianbusiness.com/industries/real-estate/dubai-real-estate-property-rents-to-rise-in-2024-luring-global-investors-experts-reveal
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