New tenants to pay higher rents in Dubai

Tenants will continue to pay higher rents on new contracts in Dubai but hike on renewals will be capped by Real Estate Regulatory Authority (Rera) despite rising demand for apartments and villas in second half of 2022, experts say.

Analysts and executives said rents continued to notch double-digit jump in first half as landlords increased prices in the face of greater demand and a lack of available inventory, especially in popular villa communities. They expect rental rates to remain elevated in the second half of the year, however, rental growth is expected to slow eventually.

Haider Tuaima, director and head of Real Estate Research at ValuStrat, said Dubai’s residential rents were on average 20 per cent higher than last year.

"This rise is only applicable to new rentals, as renewed contract amounts are capped by the Rera rental calculator," Tuaima told Khaleej Times.

He said the current trend has already seen a slowdown in pace, particularly villa segment as apartments were up 4.2 per cent while villas rose 3.3 per cent on quarterly basis. This moderation in rental growth is expected to continue in second half," he said.

Swapnil Pillai, associate director, Middle East Research at Savills, sees a positive trend for rental market as indicated in consultancy’s latest report, which said Dubai rents have grown apace, benefiting from the wider lifestyle trends seen in other markets, recording 5.3 per cent

“Outlook for prime residential rental growth remains positive as the type of units sought after by tenants continues to remain in short supply,” Pillai said.

“For those, who wish to experience a location or accommodation before making a long-term and often expensive commitment, renting continues to remain a practical though short-term solution. Large living and outdoor areas that are conducive to hybrid working patterns will continue to remain a key consideration,” he said.

HNWIs, investor relocation

Ata Shobeiry, chief executive of Zoom Property, said the rental market of Dubai has been on the rise with around 21 per cent and 22 per cent annual growth in apartments and villas, respectively, mainly due to the influx of HNWIs and investors who are making Dubai their primary residence.

"The emirate's business-friendly policies are also contributing to this growth. The same trend is expected to remain prevalent in the second half of the year as well," Shobeiry told Khaleej Times.

He said there will be increased demand for short-term rentals in particular due to the upcoming Fifa World Cup scheduled to take place in Qatar later this year.

Lack of villas

— muzaffarrizvi@khaleejtimes.com