Surging Demand for Small Dubai Apartments

Growing Demand for One- and Two-Bedroom Apartments Due to Rising Rents

The Dubai real estate market has shown significant growth in recent years, particularly in demand for one- and two-bedroom apartments. Due to rising rents and the influx of new residents, these smaller units have become the most popular choice among renters. Property prices and rental rates have been steadily increasing since 2021, now surpassing the peak levels of 2014.

What is Behind the Growing Demand?

One of the main factors is Dubai's continuously growing population. New residents seeking affordable housing are primarily interested in one- and two-bedroom apartments. Concurrently, rising rental rates force many to move into smaller units to keep costs low. This trend particularly affects mid-range apartments in Dubai's more popular areas such as Dubai Marina, Downtown Dubai, and Jumeirah Lakes Towers.

Current Rental Rates

According to a recent report based on real estate service company Engel & Völkers' data, one- and two-bedroom apartments accounted for more than two-thirds of transactions in the third quarter of 2024. The current average rental rates are as follows:

a, Studio apartments: An average of 38,428 dirhams annually.

b, One-bedroom apartments: An average of 58,812 dirhams annually.

c, Two-bedroom apartments: An average of 84,589 dirhams annually.

d, Three-bedroom apartments: An average of 145,149 dirhams annually.

e, Four-bedroom apartments: Approximately 242,063 dirhams annually.

f, Five-bedroom apartments: Approximately 356,928 dirhams annually.

g, Six-bedroom apartments: Approximately 793,971 dirhams annually.

The demand for one- and two-bedroom apartments clearly stands out, as they offer a more affordable solution despite rising rental rates.

Property Price Trends

Besides the growing population, Dubai's economic development and the city's global appeal also contribute to the continuous growth of the real estate market. The rising demand for properties drives both prices and rental rates upward, reaching new heights that surpass the records set in 2014.

What Does This Mean for Renters and Buyers?

Rising prices put pressure on renters, especially those looking for long-term solutions. Many are forced to downsize to smaller apartments, while others search for new, developing areas where prices are still lower. For buyers, this means real estate investment in Dubai still promises significant returns, particularly for smaller units, where demand shows no signs of declining.

Conclusion

Dubai's real estate market continues to expand, thanks to the city's dynamic development and growing population. The standout popularity of one- and two-bedroom apartments continues to define the rental market, as rising costs steer many renters towards these more affordable options. This trend is likely to continue as Dubai continues to attract international residents and investors.