Revealed: Dubai property leasing deals jump 400% in January 2024

The surge in property leasing is also leading to a spike in demand for property management firms in Dubai as homeowners are eager to start earnings on their investments at the earliest.

As many as 47,000 residential units are estimated to have been completed in Dubai in 2023, a whopping 50 percent jump from the approximately 31,000 residential properties completed in the previous year.

Me Do Re towers in JLT, Upside in Business Bay, and Prive Residence in Dubai Hills, besides a few other projects are among the residential projects reported to be completed by the end of last year.

“With the keys in hand, property owners are now in a hurry to lease them out, leading to the surge in leasing deals this month,” Ilnara Muzafyarova, CEO of Colife, a global property management and rental services company, told Arabian Business.

“If we compare to a year ago (January 2023), the number of apartments that property owners are leasing with our assistance has grown four-fold,” Muzafyarova revealed.

Senior executives at some of the other city-based rental services firms also confirmed the spike in leasing deals in the beginning of the new year.

“The jump in handing over of completed housing units, along with the rise in migration to the city on long-term residency plans such as Golden and digital nomad visas are seen as the factors fuelling the demand for rented properties in Dubai,” a senior executive in a proptech associated with property financing said.

Spike in leasing deals a reflection of surge in property investment demand in Dubai

Industry experts said the exponential jump in leasing deals is not very surprising as it comes in the wake of a similar jump in demand for property purchases in the last 2-3 years in Dubai, which is now catching up now in other emirates such as Ras Al Khaimah and Abu Dhabi.

Developers also are said to be of late focusing equally on timely completion of projects, as much as their rising focus on offering ‘smart’, ‘design’ and ‘sustainable’ homes.

Investors who bought real estate during the construction phase in 2020-2022, and having recently received the keys, are keen to start earning rental income at the earliest.

Muzafyarova, however, said along with availability of newly acquired possession of properties booked in off-plan projects, the rising purchases in the secondary market is also contributing in a big way to the spike in property leasing deals of late.

“A large chunk – above 90 percent – of Colife Invest clients purchase properties in the secondary market in already constructed towers. We immediately lease out such apartments, generating passive income for the owner within a month of purchase,” she said.

The property management firm engages in finding tenants, performing home staging, purchasing the necessary furniture, appliances, household items, etc in the initial month of leasing of the property.

Spike in leasing deals push rental costs further up

Industry insiders said the rising leasing deals also lead to further rise in the already high rental costs in Dubai.

Rentals in the city are estimated to have seen a 30 percent jump towards the end of 2023, from about 23 percent in the first half of the year.

Muzafyarova said a 1-bedroom apartment in the Palm Jumeirah area – one of Colife’s properties – has been leased out recently for a rent of $6,000 per month, which is 23.5 percent higher than the cost of similar properties a year ago.

The rising rental yields, along with the jump in property appreciation, are also bringing down the average payback period for investors, currently estimated at 8 years.

With tenants living continuously, the rental yield in Dubai is estimated to be at 7-8 percent annually, while property prices in the city have seen an average 14-15 percent increase from mid-2022 to mid-2023.

Muzafyarova said investors from around the world remain interested in the Dubai real estate market because of the high appreciation in value, besides generation of passive rental income.