Dubai ranked first globally in prime residential rental value growth in 1H 2024, logging a 12.1% increase, compared to a 9% rise in runnerup city Bangkok, and 7.5% in Lisbon, citing global real estate services provider Savills’ latest Prime Residential World Cities Index.

The emirate also ranked fifth in the world for capital value growth, growing 2.9% in the first six months of the year, and outperforming the 0.6% average capital value growth of 30 world cities predicted for 2024 as a whole. Growth indicates “relative confidence in the asset class,” according to the report, with prime gross yields in Dubai crossing 5% as of the end of 1H 2024, placing it among the highest-yielding cities alongside New York and Los Angeles.

Growth came on the back of the emirate’s pro-business government policies and attractive residence visa programs, as well as robust lifestyle credentials, according to a Savills press release picked up by Zawya.

Corporate relocations are also to thank, with “some of the finest brands and developers launching world-class projects in Dubai and the wider UAE to capitalize on the growing demand,” Savills Middle East residential agency head Andrew Cummings said.

Only up from here: “With existing supply running tight, prime rentals are not expected to cool off anytime soon,” Cummings added.

THE BIG PICTURE-

Rentals > sales: The growth of global rental markets outpaced that of sales markets across the 30 world cities surveyed in the index, with prime gross yields moving out by 10 bps in 2023 to 3.1%, and standing at 3.2% today.

Rents will continue to outperform capital values in 2024 and the medium term, according to Savills’ forecast, driven by scarce supply and high interest rates raising caution in the sales markets. “The potential for interest rate cuts in the second half of the year may encourage those would-be buyers to re-enter the sales market, easing price pressures,” Savills’ sellers said.

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