Tenants Believe It Makes Logical To Pay Their Current Landlord More Given That New Leases Have Increased By 20–30%.
In Dubai, more tenants are choosing to stay put while rents are rising since it is the simplest choice. Residents are prolonging their present leases rather than moving to new homes and the significantly higher rentals, which come with them. The most recent home rental transactions reflect this. According to Jean-Pierre Mondalek, CEO of the real estate marketplace houza.com, “The Ejari renewals (with the Dubai Land Department) are consuming a higher share of registrations.” “In Dubai, from May 1 to July 25, 53% of rental registrations were renewals, compared to 45% during the same time last year.”
Since the beginning of 2021, nearly all of Dubai’s mid-to-prime areas have experienced 20% rental rises for new leases. At a few companies, the rate of growth keeps speeding up. According to Tinicia Hepworth, head of leasing & short-term renting at Betterhomes Group and listing partner at houza.com. More tenants have opted to stay put, negotiate, and extend their current lease. As opposed to choosing to enter the competitor rental market because of considerably higher prices and a limited supply. As a result, compared to H1-2022, “we have witnessed a modest decline in the amount of (new rental) inquiries.”
Whether it is a new structure in Deira or Downtown Dubai, asking rentals are rising. Prices for a two-bedroom apartment Downtown currently range from Dh130,000 to Dh140,000, but they might go much higher. While the asking price for two bedrooms is closer to Dh80,000 in some of the Deira Enrichment Project’s more inexpensive districts, it is closer to Dh55,000 in others.
Even Existing Rentals Have Increased
Although truth is that landlords are demanding more from tenants who wish to renew their current leases. Estate agents, however, assert that if the renter were to weigh the costs of leaving with the benefits of remaining. The latter choice would make more sense.
For many, staying there or accepting the RERA Rent Index hike makes more sense than moving and paying significantly more than they otherwise would, according to Mondalek, who noted that rentals have increased by more than 20% throughout Dubai.
The average increase in rent requests from landlords is between 10 and 25%, according to market feedback on current leases. The two-year lock-in offered is the main benefit of moving to a new rental property, according to one estate agent. “When rents started to rise last year, it made sense. Now that they have to pay that extra 20–30%, many tenants have to think twice about moving.
This can cause concern for investors whose new homes need to be delivered & rented out. They might have been thinking about ways to increase their rental income given the rising cost of the rent. However, they now have to deal with the fact that many prospective tenants are not willing to pay 20–30% more.