Rise In Dubai Rents Outpaces RERA Index
The rate of growth of rental prices in Dubai’s residential property market is accelerating, as more landlords are starting to demand rental prices significantly above the official rental index, or RERA index, from their tenants for rental properties in high-demand locations.
In 2022, Dubai is experiencing a major turnaround in the rental market following five years of a soft market. There has been an increase in rent of around 10 percent across Dubai over the past 12 months to the end of March, but in places like Palm Jumeirah, there has been a 36% increase year-on-year on properties for rent, followed by Jumeirah Park with 25% increase, and the Lakes with 21% increase.
Renters facing out-of-cycle rental hikes are turning to the Dubai Land Department Rental Disputes Settlement Centre as a last resort. Renters also want their landlords to maintain the RERA rental index range-bound increase policy.
Rents in Dubai’s most sought-after residential areas are based on the RERA rental index. A landlord must stick to clear percentage bands when raising the rent. The demand for leased homes has been much higher over the past five years, according to market sources.
Demand for new homes is not solely from existing residents shifting into new homes, as in last 2020 and early 2021. A large portion of this growth comes from newcomers taking up residency in Dubai. The residential rental space in Dubai will see a similar trend as the freehold sales did. Therefore, it is likely that the index numbers will be updated shortly.
Aside from villas on the Palm or Jumeirah Park, Dubai Marina (34%) and The Greens and The Views (both 24%) also have sharp increases in rent. Tenants of the apartments on the Palm face steep rent hikes, up 34 percent from what they experienced in March 2021.
Another month of stable and strong sales was experienced in April, both for off-plan units and ready homes. Originally, developers were expected to have launched new off-plan offerings post Eid earlier this month, but this may now happen by the end of June. July and August are likely to be slow months in the industry.
A recent survey also reveals Dubai as one of the most expensive and profitable locations for Airbnb landlords in the world, especially for those owners who have properties for rent near Burj Khalifa. According to the survey, once landlords have invested in a property in Dubai Downtown or a Property near Burj Khalifa, it may only take them a bare minimum of 121 days of occupancy to earn back their investment because of the high value of a per-night stay near Burj Khalifa.
Improved investor sentiment and pent-up demand have also boosted property sales in Dubai. Among the new initiatives, the 10-year golden visa scheme and visas for retired ex-pats will boost the local economy in Dubai.
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