Dubai’s rental increases continued to moderate towards the end of 2023, with gains in the last quarter averaging less than in the previous months.

From October to December 2023, rental rates for apartments across Dubai posted gains of just 2% and 3% over the previous quarter, and by 15% and 14% year-on-year, Asteco said in a report released on Thursday.

The growth rates were lower than the gains recorded in the third quarter of the year, especially for apartment units.

“While residential rental rates continued their upward trajectory, rental growth slowed towards the end of the year,” the consultancy firm said.

Asteco’s previous Q3 2023 report had already recorded a definite slowdown in the rental market, with leasing rates for flats and villas rising by 3% and 2% over the previous three months and by 18% and 19% over a year earlier.

Leasing rates for residential units in Dubai had been surging for more than two years on the back of strong demand.

The growth rates started to moderate in the beginning of last year, according to CBRE in a separate report.

“Despite demand remaining elevated, the rate of rental growth has contracted every month this year to date,” Taimur Khan, Head of Research at CBRE in October.

In the year to November 2023, CBRE said average residential rents in Dubai grew by 19.2%, down from 19.7% a month earlier. Over the same period, average apartment and villa rents went up by 19.6% and 16.6%, respectively.

During the same month, the cost of renting an apartment or villa cost around AED 111,622 ($30,000) and AED 324,835, respectively.

(Writing by Cleofe Maceda; editing by Seban  Scaria)