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Dubai's high rentals will not sustain, says survey

On being asked whether rents in Dubai reflect residents' income, when compared with other countries, a whopping 92 per cent said that rents take up a larger proportion of Dubai residents' income than elsewhere. The respondents cited countries like the UK, Australia and US as examples where, on average, rents form a smaller proportion of residents' annual salaries. Reflecting this anomaly, 72 per cent said that they spent half or more of their annual income on home rentals, while 67 per cent said that this made living in Dubai 'unviable' in the medium to long term.

While only 45 per cent of the respondents felt that the sale prices of properties were too high in Dubai, nearly 87 per cent said that rentals are unsustainable at current levels. But only 32 per cent of the respondents said they were "sure" rentals would come down in the next three years, while a majority (47 per cent) said they were 'cautiously optimistic' of rents subsiding to lower levels. As more individual sellers of property enter the market, developers' prices will be affected, the survey found. Of the respondents 62 per cent said that the mortgage market in Dubai is still "nascent" as schemes such as rent-to-buy are either non-existent or very rare, while 21 per cent felt that products were growing to meet the needs of property buyers. However 82 per cent said that mortgage was "too expensive" when compared with developed markets.

Citing an example, one respondent said that in the UK average mortgage repayment as a percentage of average household income has remained between 15 per cent and 20 per cent in the past 20 years, never exceeding 25 per cent. "If the same conditions are replicated in Dubai, most people will prefer to buy properties on mortgage than rent homes," he said.

The survey, commissioned by DSL Exhibitions, the organisers of the upcoming Resale and Rental Property Show in Dubai, generated results from respondents who have lived in Dubai for at least three years. The demographic backgrounds of the respondents were chosen to reflect the population mix of Dubai to avoid bias that a particular segment may hold on the issues presented. The proportions were as follows: UAE nationals 20pc, Indian sub-continent 60pc, Arab expatriates 15pc and others 5pc.