Dubai's residential property rents surged in the third quarter of the year on the back of high demand, according to a new report.

Across the emirate, the cost of leasing villas went up by 28% year-on-year, while apartments registered a 26% jump, real estate consultancy Core said.

Rents rose faster than sales prices during the period, leading to higher yields.

Villa prices were up 16% year-on-year, higher than the 8% rise in apartment prices.

Dubai's residential leasing market has  picked up as the population continues to expand. 

The trend is likely to continue in the fourth quarter, especially within the short-term rental segment. According to real estate agents, the short-term leasing sector alone is seeing higher uptake from the Russian market, as well as winter and FIFA World Cup visitors.

"Rents are increasing due to rising demand and higher population growth across income segments," said Prathyusha Gurrapu, Head of Research and Advisory at Core.

"Short-term lettings market is also expected to see a boost during Q4 on the back of winter tourism and FIFA, " Gurrapu told Zawya.

Gross yields

For villa properties, gross yields went up from 5.1% to 5.6%. Owners of apartment units witnessed higher gross yields, which rose from 6.1% to 7.1%.

As demand continued to increase, developers have ramped up project launches as well.

Third-quarter off-plan launch volumes increased by 61% year-on-year, exceeding pre-pandemic levels by 11%.

"The strong momentum that the Dubai real estate market gained in early 2022 continues with robust growth seen across performance indicators for all asset classes," Core said.

"The raft of demand drivers that were set in motion over the last few years to cement Dubai's global positioning are bearing results."

(Reporting by Cleofe Maceda; editing by Seban Scaria)