Analysing Rental Demands in UAE – Why are UAE Rents Increasing?
The UAE’s rental market has seen a significant surge in demand, leading to a continuous increase in rental prices. This trend is particularly evident in Dubai, where population growth far outpaces the supply of new homes. Here are the key reasons why rents in the UAE are expected to keep rising until 2025.
Why Will UAE Rents Keep Increasing Until 2025?
The UAE real estate market has been growing exponentially since 2022 and is set to continue to grow until next year. Let’s examine the factors that have led to the increase in rental prices.
Surge in Population
The UAE has seen a rapid increase in population. The disparity between population growth and housing supply has created significant pressure on the rental market, pushing prices up. The country’s appeal as a global business hub and a desirable place to live continues to attract a steady influx of people, exacerbating the demand for rental properties.
Fewer Ready Homes
One of the critical issues impacting the rental market is the lack of ready homes. Despite the ongoing construction boom, the number of new homes completed is insufficient to meet the growing demand. This shortage has increased competition for available properties, driving higher rental prices.
Removal of UAE from FATF Grey List
The UAE was removed from the Financial Action Task Force’s (FATF) Grey List in February 2024. The elimination of this text showcases the nation’s improved openness in financial dealings, making it more appealing to international investors. The increased confidence among international investors has led to a surge in demand for real estate, particularly in the luxury segment. This heightened demand further strains the rental market, contributing to rising prices.
Rising HNWI Population
The UAE has become a hotspot for high-net-worth individuals (HNWI) worldwide, including the US and Canada. These wealthy individuals seek luxury properties, driving up demand and prices in the high-end segment.
Analysing Rental Demands 2024
The average property rental prices have increased by as much as 26% by the end of 2023 and this trend is expected to continue for the upcoming years. The UAE has experienced a significant increase in the demand for property ownership from residents, international investors, and high-net-worth individuals due to the property boom and the growing housing market.
Real estate property experts anticipate that renting out their properties is a great avenue to capitalise on these trends and maximise their return on investment.
The Bottom Line
As we edge closer to 2024, the rental market in the UAE indicates no signs of calming down. Demand for properties continues to outpace supply, with a notable increase in off-plan property transactions. However, the developers are responding to this demand by launching new projects at an unprecedented rate.