No yield compression on Dubai rents: Knight Frank

No yield compression on Dubai rents: Knight Frank

As residential property sales prices in Dubai have risen for nine consecutive quarters, rents have kept pace with the increase meaning there is no yield compression for investors.

Knight Frank’s Spring 2023 Dubai Residential Market Review said rents in the emirate had risen in line with capital value growth, and that rents for villas have now exceeded the previous peak of 2014 by 8%.

Average rents in the city are now 88 dirhams ($23.96) per sq.ft., with Palm Jumeirah villa rents increasing by 31% in the first quarter of 2023 compared with Q1 2022, and by just over 110% overall since the start of the pandemic, one of the highest gains in the market, the report said, reaching AED 152 per sq.ft.

Average lease rates in The Springs and Arabian Ranches average lease rates have climbed by nearly 35% and 23% in the last 12 months.

Apartment rents have also grown, rising by 26% since last year and are now at AED 90 per sq.ft., with Palm Jumeirah and Business Bay seeing the highest increases at 34% and 31%.

They have exceeded pre-pandemic levels by 27% but are still 13% lower than the last market peak in 2014. But villas have seen average rental rates