Residential rents in Dubai are expected to continue rising, albeit at a slower pace than before, real estate consultancy CBRE said in its latest report.

“Affordability constraints are beginning to catch up,” the consultancy said, adding that several key and prime residential neighbourhoods are heading toward single-digit growth.

Average residential rents increased by 21.1% in May, up from the 20.8% growth a month earlier. The increase was underpinned by a 22.2% rise in average apartment rents and a 13.1% increase in average villa rents.

In May, average apartment and villa rent stood at AED 126,598 and AED 352,572 per annum, respectively.

The highest annual apartment and villa rents were found, respectively, in Palm Jumeirah, where asking rents reached an average of AED 272,867.

Higher rents in the emirate’s core and prime residential areas have led to spillover into secondary communities, which are witnessing considerable annual increases in rents, the report added.

Meanwhile, the number of rental registrations in the first five months reached 255,178, an increase of 5.9% year-on-year, according to data from the Dubai Land Department. This increase was driven by a 12.2% growth in renewed rental registrations; however, new contracts registered declined by 3.7%.

“We are seeing tenants choosing to renew in same place, as the rate of rental growth in certain neighbourhoods has significantly weighed on affordability,” CBRE stated.

(Editing by Seban Scaria seban.scaria@lseg.com )