Residents Consider Several Factors When Selecting A Rental Property, Including Proximity To Work, School, And Community Amenities.
Tenants in Dubai are increasingly choosing to renew their current apartments rather than relocate due to recent increase in rents. Because of Dubai’s population growth, rental inventory is under severe strain. With occupancy levels achieving multi-year highs from across Emirates. Recent population growth in Dubai continues to put stress on today’s rental inventory. Moreover, we are seeing rapidly rising prices within the most popular areas, with occupancy in Dubai at a five-year high.
“This is good news for investors, but it forces tenants to look even farther afield for good value. Overall rental market volatility has decreased significantly. As tenants prefer to stay put and regenerate instead of face today’s prices “said Richard Waind from Betterhomes. According to Taimur Khan, head of research for Mena at CBRE in Dubai, rental rate growth in Dubai has reached record highs. Apartment and villa rents increased by 26.7 % and 25.5 %, respectively, in the past year.
According to CBRE’s most recent Dubai Residential Market Snapshot report, the average monthly rent for apartments was Dh89986. And the average annual rent for villas was Dh268758 as of September 2022. The emirate’s population surpassed 3.5 million for the first time in April 2022. An increase of more than 100,000 since 2020.
According to Prathyusha Gurrapu, head of research and advisory at Core, a real estate consultancy, the rental market has experienced a rise that is over 25% steeper than the increase in sales price. However, she emphasized that such a rapid increase in rent is unsustainable. Due to the costs involved in moving, tenants may also decide to stay in their current apartments even if the rent is reduced.
“It is difficult to renew or cover moving expenses when faced with a nearly 25% annual rental increase. Many tenants are forced to downsize and move to more affordable areas. Or in many cases, because rental outgoings are greater than mortgage payments. Because inflation and rising costs of living are outpacing salary increases and ongoing rents, respectively.”
Gurrapu added that when selecting a rental home, tenants take into account a number of variables. Such as proximity to their place of employment, their children’s school, and local amenities. According to Richard Waind, the Fifa World Cup in Qatar will significantly boost Dubai’s short-term rental market, which could have a record quarter. Given the number of football fans in the area, many of whom will utilize Dubai as a base, he said, “Dubai could encounter a mini-Expo effect.”
There really are 10,000 active renting listings in Dubai, according to brokerage firm Unique Properties. Moreover, their occupancy rates increased by 32% between December 2020 and December 2021. While average daily rates increased by 15% to 28%.
“The short-term rental market in Dubai is still expanding. Despite the fact that Dubai is one of the top 5 most frequented cities in the world. In addition, that it still lags behind major markets like London, which has twice as many vacant rental listings. The city’s short-term rental market will continue to thrive “said Unique Properties’ founder and CEO, Arash Jalili.
Betterhomes noted that due to rising rents, more families and individuals with long-term plans to settle in the UAE are choosing to buy rather than pay the mortgage to their landlord. According to Betterhomes’ third-quarter data, the number of end users purchasing real estate in Dubai increased from 36 % in the second quarter of 2022 to 45 % in the third quarter, drawn by the government’s recently introduced five-year green visa, 10-year golden visa, and other long-term visa schemes.