Tenants Who’s Leases Are Up For Renewal Face Significant Rent Hikes as Supply Continues to Tighten.
There are fewer new residential listings in Dubai available for one-year leases. Which should further pressure rates for new leases. This decline is being brought on by the city’s ongoing demand from newcomers. The rise in landlords who are renting out their properties on short-term leases.
This is happening at a time when annual rents have already risen by 15–25%. In nearly every popular communities in Dubai over the previous 12 months. It opens the door to the possibility of landlords making sharper rent demands in the upcoming weeks. Whether those demands are for new leases or lease renewals. Before new housing buildings in Dubai are finished. Hopefully, the upward stress on rents is lessened, it could be another four to six months.
Liam Dawett, Business Branch Leasing Manager at Betterhomes, noted that turnkey apartments are now less common in areas like Downtown and Business Bay. “Prices are still rising as a result of the scarcity of vacant properties on the market.” (Investors can purchase turnkey properties right away and rent them out.)
Up until the first or 2nd quarter of 2023, availability is decreasing. Less rental listings are currently hitting the market. Owners of vacant properties are raising their prices. Because there are not enough turnkey apartments available, even though the RERA Rental Index does not restrict them. Tenants who require the space or believe it is worthwhile to pay the rent in these regions are doing so. The market does not offer them many options.
It is A Seller’s Market for Landlords
This does put the tenants in a difficult situation. Especially those whose leases are up for renewal in the coming weeks. As rents become more expensive daily, their chances of finding new residences are. That match their budget is decreasing. Landlords even demand much more on lease extensions than what the Rental Index suggests.
To secure market rates for their new leases, the landlords would prefer that their current tenants vacate, according to an estate agent. The lack of supply is seriously hurting the Dubai real estate market.
According to market sources, recently finished residential buildings from companies. Like Wasl Properties and housing, developers are leasing out quickly. Additionally, some of the first-quarter completion-due buildings have already received reservations.
Nobody should be surprised by anything because even rental units on the Palm Jumeirah or Dubai Hills that cost more than Dh1 million have tenants lined up. While the demand for sales of Dubai homes had received the majority of the attention, rentals were also doing quite well.
Since late 2021, short-term rental choices have gained popularity among landlords in Dubai. And are doing so more and more in Abu Dhabi and Sharjah. Landlords are increasing their reliance on short lets as a result of the Doha World Cup currently underway. The expected influx of tourists in Dubai during the final weeks of 2022.
Some landlords have affirmed bookings through the end of January at lease rates that are 20–40% higher than they were this time last year. According to Dawett, some owners are more inclined to choose this option. Because they are seeing higher returns from short-term rentals. They “will only reevaluate (their positions) in the new year.”