A significant influx of new residential units entering the Dubai market in 2024 is anticipated to moderate rental price growth, according to a recent industry report by Savills Middle East. Swapnil Pillai, Associate Director of Research, predicts that over 20,000 new units will be completed this year, following a surge of over 47,000 launched in 2023. This increased supply, particularly concentrated in Dubai’s southeast region, is expected to limit significant price increases across the city.
Pillai suggests that rental growth will likely stabilize, particularly in peripheral areas with a high volume of upcoming supply. However, he doesn’t foresee a decrease in rents. Instead, the new stock is expected to improve overall housing availability, leading to a period of price stabilization. This comes amidst continued healthy demand for residential rentals, fueled by Dubai’s economic growth and its large expatriate workforce.
The report highlights a growing demand for luxury residential properties. Transactions involving properties priced above AED 10 million increased by 63% year-on-year in 2023, indicating a two-tier market. Established locations with luxury developments continue to see sustained demand.
Savills Middle East projects a 5% expansion of the UAE economy in 2024. The growing non-oil sector, now accounting for 73% of GDP, strengthens private sector resilience. Additionally, ongoing mega-infrastructure projects are expected to further stimulate economic activity.
The report also indicates a strong performance in the luxury sales market, with transactions growing by 63% in 2023. Established locations continue to be in high demand, with new luxury developments experiencing positive sales figures.
Looking beyond residential, Savills anticipates a 20% increase in prime office rents this year due to low vacancy rates. Logistics yields may also experience some tightening as interest rate cuts are anticipated.
While acknowledging global economic challenges, the report expresses optimism for the Middle East real estate sector. Government efforts to stimulate non-oil growth sectors are seen as crucial for economic diversification and continued robustness in the region’s property market.
Publish Mar 11, 2024
Source: https://www.arabianbusiness.com/industries/real-estate/dubai-real-estate-rental-price-growth-to-stabilise-as-20000-new-properties-to-hit-the-market-in-2024
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