Dubai: More tenants seek budget-friendly options amid record-high rentals

As rental prices in Dubai hit record highs, more tenants are becoming price-conscious and seeking budget-friendly options.

Real estate consultants say that property owners in affordable areas such as Dubai South, Town Square, and northern emirates are seeing growing interest from tenants.

This increased demand is fuelled not only by new residents relocating to Dubai in search of better opportunities but also by current tenants moving to more affordable properties in response to rising rents.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

“Affordable communities continued to lead rental growth in relative terms. This trend emphasises the demand for ‘affordable’ housing options, with price considerations being a significant factor for many tenants. Consequently, whilst landlords in these areas experienced increased interest, occupancy and rental rates, prospective tenants remained highly price-sensitive. As a result, attracting and retaining tenants in more upscale locations may become challenging,” said property management firm Asteco.

James Joughin, executive director for advisory and valuation at Asteco, said many long-term tenants are facing significant rent hikes in their current homes, particularly following the update of the Rera rental calculator in March 2024.

“The drive to find more affordable housing options has led to increased rental activity and rent hikes in the lower and mid-end segments. This trend benefited affordable communities within Dubai, such as Dubai South, Damac Hills 2, and Town Square, as well as the northern emirates, which offer lower rents and attract tenants with their growing supply of quality developments, improved infrastructure and enhanced accessibility,” explained Joughin.

Supply-demand matching

Dubai's property market has experienced exceptional growth over the past two years, with a significant imbalance between demand and supply across residential communities in Dubai.

“This has naturally led to an increase in average letting prices across the market, particularly in popular areas like Palm Jumeirah, Dubai Marina, and Jumeirah Beach Residences. However, the market is working to keep pace with this demand,” said Lewis Allsopp, chairman of Allsopp & Allsopp Group.

“Last month, we saw a surge in available rental properties, with new listings up 65 per cent year-on-year and 33 per cent month-on-month. This influx is a positive sign, of the market moving towards an increased balance between supply and demand,” added Allsopp.

Flexible landlords

In order to cope with rising rentals, one of the biggest trends is the rise of flexible payment plans. Landlords are increasingly offering options to pay rent in four or more cheques, helping tenants spread out their costs and manage their budgets.

To offer greater flexibility, landlords are providing rental payment plans with more cheques, rising 13.6 per cent from the previous month. “This allows increased affordability despite rising rental costs. This increase in available units also provides tenants with more options and empowers them to seek better value in terms of location, size, and amenities,” said the chairman of Allsopp & Allsopp Group.

• Dubai: Landlords offer flexible payment terms, issue fewer eviction notices