Dubai: Why tenants are unlikely to see relief in rents anytime soon

Dubai’s residential property market will remain favoured towards landlords as rents are projected to continue to rise in the medium term due to high occupancy amidst the increasing population.

Due to the consistent rise in rentals in the post-pandemic period, tenants are increasingly opting to renew their tenancy contracts.

Richard Waind, group managing director, Betterhomes, said the supply of ready properties remains tight, putting pressure on both sales and leasing prices.

“Given the rise in rental prices over the last 18 months, we have increasingly seen tenants choosing to renew their contracts. This has resulted in a 29 per cent decrease in leasing transactions,” the real estate brokerage firm said, quoting its data.

Abdulla Bin Sulayem, CEO of Seven Tides, said much has been made of the luxury real estate market in Dubai, but demand for value-led accommodation has been consistently strong.

“It will continue unabated as the Dubai economy continues to expand, stimulating expatriate population growth,” he said.

Though rents continue to increase in most of the localities, however, analysts say that some areas are seeing stability in rentals, albeit at significantly higher levels than a year ago.

With Dubai’s population continuing to grow and tenants increasingly staying put, it said occupancy rates at the properties managed by the company have hit a record high of 97 per cent.

“Until there is a substantial increase in the supply of properties, renters are unlikely to feel much relief from price rises,” it said.

“As we look towards the rest of the year and beyond, Dubai looks set to continue to be a major benefactor of increased global migration of high-net-worth individuals and capital. Strong GDP numbers, population and high investment returns are set to continue, with long-term projections of Dubai’s real estate market looking very healthy,” said Waind.

Single cheques remain dominant, accounting for 29 per cent of Betterhomes transactions, followed by two cheques (28 per cent), which shows that tenants are willing to pay even higher rentals for A-grade properties.

ALSO READ:

• Dubai rent increase: Most affordable residential areas revealed

• Are rent-to-own units a good option for property buyers in Dubai?

• UAE
• Newsletters
• Dubai