Saturday 12 April 2014

Dubai rents rise despite new supply

Dubai: The upward pressure on Dubai’s residential rents continues to mount even as new homes are getting delivered in higher numbers — in the first three months of this year, rentals were up by 7 per cent over the fourth quarter of 2013. On a year-on-year basis, Dubai’s tenants may have seen a 23 per cent increase on average in what they are paying to their landlords, according to an update put out by consultant JLL.

Apartment rentals — and the most worrying for the vast majority of the city’s tenant base — recorded a 26 per cent annual gain, while those for villas were slightly muted at 12 per cent. The JLL forecasts, however, suggest that the pace of rental increase might be slowing down.

If it has to slow down appreciably, more of the immediate property supply needs to get into the hands of end-users. In the first quarter, around 1,800 units were handed over in the city and a further 24,000 are expected for the full year, based on JLL estimates.

In all, 39,000 homes are to be delivered in the next two years, which would be a 9 per cent increase over the existing total stock of 365,000 units in Dubai. The question would then be whether this represents a sufficiently large base to keep medium-term rental increases in some sort of check.


“Dubai’s momentum from 2013 has carried through into the first quarter of 2014,” said Craig Plumb, regional head of research at JLL.

For those tenants considering a shift to buying their own homes, the continuing sales value gains is a constant niggle. For instance, “affordable” residential communities went through some of the sharpest increases in asking prices. Sports City saw an upturn of 41 per cent on an year-on-year basis, according to JLL, while International City and Discovery Gardens were higher by 35 per cent and 33 per cent respectively.


Values in the prime locations of Downtown and Marina were up “only” 24 and 21 per cent respectively during the same period. In fact, trends indicate that in Marina, JBR and The Palm, prices are now near or already on par with their 2008 peaks.

“There are a lot more potential end-users in the market now interested in properties across the entire price spectrum whereas earlier they were mostly found in the Dh5 million plus bracket,” said Chandrakant Whabi, CEO of Acrohouse Properties.

“There is a lot more activity taking place in the Dh2-4 million property price category and that can be put down to those tenants seeking a home of their own. By getting in now, they also seem to be hedging against further value increases that would make it difficult for them to buy.

“For many, it could be that they had enough of being pushed around by landlords - that can prove an overwhelming sentiment driving future demand trajectory.”




Comments (33)

  1. Added 17:36 April 8, 2014
    The landlords are increasing the rent as per their wish and they are trying to justify that it is as per the rent index .There is no index to know whether the tenants can afford it or all the people working in different sectors and companies have sufficient income to pay.every year there is 5,10 15 even more percentage hike in rent and the salary remain same how this will balanced.
    ibrahim, Dubai, India
  2. Added 17:16 April 8, 2014
    In our Old Villa in Satwa, wherein we rented a very small partition, we received an increase of 20% without any renovation or a drop of paint to clean the walls, or an insect spray to kills the bed bugs, cleaning of water tank for maybe 20 years ,in short no, other changes but the increased of rent and DEWA bills. the moment expo winning announced-the ff day we received the noticed of increase in rent by 20 %...Miserable situation for us with meager income. Please consider our situation too.
    CORAZON TARCENA, DUBAI, United Arab Emirates
  3. Added 16:22 April 8, 2014
    There are lot of good works and foresighted actions happening in this place in the growth path. I hope the authorities will defenitely look into the aspect of unfair huge rent increases by land lords as well. The middle class people suffer due to huge increases of rent. Even in very old buildings without any modern facilities, the same standard of rent increase is used. But, there is no corresponding increase in salaries (except for the few lucky ones). Hope the authorities will look into this and rectify the loop holes.
    SA, Dubai, United Arab Emirates
  4. Added 15:16 April 8, 2014
    Is there anyone who read this and takes action?.In Al Nahda sharjah I am paying 35,000 and now the rent will increase between 55,000 to 65,000. What type of an increase is this?. Owners says take it or leave. My Question is where is law? Simply now i am living with my family (Wife & Three Kids) i am spending almost my full salary here, if i will unable to servive, i will send my family to my home country and i will start to live alone here in this case definatly i can save money.In 2020 visitors will come for visit but what about residence visa holders they are living now i think no one thinking for us?.This will only promote to people to share flats/Villas, which is again against the rule and may be some serioues issues will arise. There should be some standard to rent the flat. Some rules and conditions to control the rental increase. Is there anyone who can help to control all this?. Please i have request to govt they should make strict rules regarding rent.
    Asif, DUBAI, United Arab Emirates
  5. Added 15:07 April 8, 2014
    As per RERA, the landlord is allowed to increase from 10%-20% depends on the area prices which are placed by RERA themselves. if the landlord is increasing any dhs above the 20% limit. you can go file a case against them and they will get into trouble. Been there done that. Dubai has order and laws, people just need to know them and follow them.
    Amer, Dubai, United Arab Emirates
  6. Added 14:33 April 8, 2014
    As per latest reports from my friends, there are lot of vacant buildings and flats available. But every one thinks it will be rented out only at higher rate. But the problem is if we take these rents , we cannot pay at the end. there is no salary increase or benefits for last 5yrs.
    JACK, Dubai, United Arab Emirates
  7. Added 14:30 April 8, 2014
    In my opinion, yes landlords are greedy, specially owners of freehold properties who are themselves expatriates and have invested in property to make a profit. But the main driving factor behind this rent increase nuisance are the greedy real estate brokers. Seems they have not learnt any lesson from 2008. They are the ones who, in their endeavor to extract greater commissions from owners and tenants alike, keep showing greener pasture to the landlords. I bet you if RERA takes matters into their own hands by passing a law by way of which all properties for rent and sale can only pass through RERA and eliminate the real estate brokers from the equation, the rental market will definitely be corrected and brought to the position where it should be.
    Nasir, Dubai, United Arab Emirates
  8. Added 14:00 April 8, 2014
    Think there is something inherently charecteristical and unique to property market in UAE particularly Dubai when it comes to what determines pricing.. it doesnt have a corelation between supply and demand but rather appears to have other factors influencing the ups and downs ( although rent going down is far from a possibility) such as rumour milling, sense of insecurity in jobs so a new tenant's first priority is to settle down whatver may be the cost, a strong perception that an expatriate tenant cannot easily win the case against a landlord or real estate holdings company etc.. In spite of being considered a tax haven , it is a paradox that more than half of the salary of an expatriate worker goes towards hiked up rents. You may have had lived in an apartment for 20 years but there is no way you can own it , another reason perhaps the most important reason for such a situation exists here
    Ismail Mohd, Dubai, United Arab Emirates
  9. Added 13:56 April 8, 2014
    Why are thee people complaining.. why can't they just celebrate the winning of Expo 2020 on the streets in the evening, go to work in the day time ...spent the hard earned money in the evenings.... so that life in Dubai is like Alice in Wanderland!!!
    Bhakthavar Khan, Dubai, United Arab Emirates
  10. Added 13:44 April 8, 2014
    I laud the UAE for winning the Expo 2020. However, can someone please explain to me why the landlords are increasing their rents phenomenally and giving Expo 2020 as an excuse. The Expo shall take place only 6 years later and how this has any bearing on existing rents, is beyond me. Some action should be taken by the government to curb this.
    Seema R, Dubai, United Arab Emirates

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