Dubai tenants opt for multiple payments amid rising rents but face increased rates

As the upward trend in Dubai property rental continues, tenants are opting for multiple cheque payments to manage their costs. The trend of 4-plus cheque payments is growing compared to last year as tenants look to overcome rising costs in the country, industry executives explained.

However, this is coming at a cost to tenants, as some landlords are increasing rates for people who choose this option.

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According to real estate consultancy Allsopp & Allsopp's data, the third quarter of 2024 showed a notable rise in tenants opting for four or more cheque payments, with six and eight cheque payments increasing by 33 per cent and 36 per cent, respectively, compared to the third quarter of 2023. Rental payments of four-plus cheques accounted for 32 per cent of all contracts, compared to last year's period, which saw the one cheque payment most popular.

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"This trend suggests that despite rising rental prices, tenants are willing to pay these amounts when offered flexible payment options, as they seek to live in premium, high-quality communities. This further indicates the rise of liquidity in the market, mainly fuelled by new residents relocating to Dubai," said Lewis Allsopp, chairman of Allsopp & Allsopp.

He added that a popular trend noted in the third quarter was the rapid arrival of rental listings on the market, with a 13 per cent increase in the last quarter.

"With more properties on the market, the rise in rentals was fuelled, resulting in flexible payment plans offered by landlords. The most popular rental payment plan seen was for 4-plus cheques, accounting for 32 per cent of all contracts, compared to the trend for the same period last year, which saw the one cheque payment as the most popular. With rental prices continuing to rise, tenants are increasingly opting to spread payments over multiple instalments to manage their costs," said Allsopp.

Rents have reached an all-time high in the emirate due to unprecedented demand from professionals and high-net-worth individuals relocating to the emirate.

Prathyusha Gurrapu, head of research and consulting at Cushman and Wakefield Core, said many tenants are increasingly opting for multiple cheques to better manage their costs, especially in the wake of rising rents.

"This provides more flexibility and reduces the financial burden of large lump-sum payments," said Gurrapu.

According to Allsopp & Allsopp, rental demand continues to increase across the city faster than supply entering the market, resulting in an increase in rental prices. To keep up with the rental payments, tenants are increasingly looking to spread their rent over multiple payments rather than in one lump sum.

"In addition, we are seeing an ever-increasing population, many of whom are coming from countries where monthly rental payments are the norm, and they expect to pay over multiple payments throughout the year. We also have the Noqodi system, which facilitates direct debit payments for rent. This adds more security and comfort to the process for landlords, which leads more to considering multiple payments, as well as making financial life easier for tenants," said Lewis Allsopp.

Landlords increasing rents

However, Prathyusha Gurrapu said the market remains landlord-friendly as many landlords prefer fewer cheques.

"We've observed that large institutional landlords, like Wasl, are more flexible by offering monthly payment options and accepting various payment methods, including cheques or electronic transfers," added Gurrapu.

"As more tenants request to spread their payments, some landlords may respond by increasing rents for those who choose this option. However, the number of cheques remains negotiable, largely influenced by current occupancy levels and demand for a particular property. New landlords in recently handed-over properties with lower occupancy levels may find more flexibility in negotiating overall rental terms," she added.

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