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Dubai: Tenants increasingly entering multiple-year contracts as rents continue to rise in 2024

Industry executives claim that landlords are also willing to wait for more favourable offers from tenants

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Rents in Dubai, rent, real estate, Dubai
by

Waheed Abbas

Published: Sun 10 Dec 2023, 11:52 AM

Last updated: Sun 10 Dec 2023, 8:45 PM

Anticipating rentals staying high in the coming years, tenants in Dubai are increasingly entering into multiple-year contracts with landlords to protect themselves from the rise in rents.

Industry executives claim that landlords are also willing to wait for more favourable offers from tenants, expecting demand for their properties to stay high.

It is projected that the rents in Dubai will continue to rise in 2024 but at a more steady pace than the past couple of years amidst high demand from new tenants.

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“We have been finding tenants and landlords are entering into more multiple-year contracts. Usually because of the increasing prices over the last few years, tenants are requesting two and three-year tenancy contracts to lock in the price at today's price and have the security of staying in the home for the next couple of years,” says Jacob Bramley, leasing manager at Betterhomes.

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Most of the tenants sign one-year lease contracts with the landlords. But as the demographics case, this will reflect in new trends among the tenants and property owners.

According to Property Finder’s data for the third quarter of 2023, there has been a significant increase in rental contracts with a year-on-year increase of 11 per cent, driven mainly by renewals.

Landlords willing to wait

Since Dubai is currently a landlord-favoured market, Bramley said some property owners are inclined to wait for the most favourable offer.

“However, our observations suggest that, due to the price surge since 2020, experienced landlords are adopting a more pragmatic approach. They acknowledge the substantially increased value of their properties and are increasingly open to securing and locking in these higher rental prices,” added Bramley.

Tenants want flexible payments

According to Bramley, tenants increasingly want to pay rent in multiple 2 to 4 cheques as 1-cheque payments are becoming less common.

Cherif Sleiman, chief revenue officer, Property Finder, said tenants are looking for options that offer flexible payment facilities and streamlined maintenance requests for greater convenience.

Property Finder’s data showed that areas that may have been unexplored previously are now making it to the most searched localities.

In November 2023, 66 per cent of tenants were seeking furnished properties, while 32 per cent looked for unfurnished options. In contrast, preferences for villa/townhouse rentals showed 51 per cent choosing unfurnished units over 48 per cent considering furnished properties, giving landlords more diverse requirements to cater to, while simultaneously creating scope for greater returns for those who choose to turn towards ownership.

Property Finder added that community decisions are also strongly driven by factors like green areas, family-friendly communities, luxury developments, affordability, waterfront views, sports enclaves, historic charm and outdoor activities among tenants.

“As a result, we have seen these trends influence tenant demands from properties they seek to lease. While we have seen landlords adapting to these demands by becoming more flexible, this has been a limited reality. Moving forward, landlords who can adapt to these evolving demands are the ones who would be well-positioned to attract and retain tenants in the current rental market,” said Sleiman.

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Waheed Abbas

Published: Sun 10 Dec 2023, 11:52 AM

Last updated: Sun 10 Dec 2023, 8:45 PM

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