Rents in Dubai fell Since the coronavirus-induced movement restrictions were at their peak, and more people moved to bigger homes with gardens and outside amenities. As residential rents rise in the Emirates, many are now choosing to downsize or move to cheaper areas.
As Dubai’s economy recovers from pandemic-driven headwinds, the emirate’s property market rebound has accelerated. Dubai Statistics Centre preliminary data show that the emirate’s economy grew by 6.2% in 2021. Government data indicate Dubai’s gross domestic product has grown by 5.9 percent in the first three months of the year. New orders rose sharply in September despite an increase in input costs, as the Dubai non-oil private sector economy maintained a “robust” expansion rate.
According to the S&P Global purchasing managers’ index, the emirate measured 56.2 in September. Inventories and staffing grew less than expected, pulling it back from the 38-month peak of 57.9 reached back in August.
According to property consultancy Houzon, Dubai’s rental market has experienced steeper price increases than its sales market.
There is an annual increase of 28 percent in villa rents in Dubai and 26 percent in apartment rents. The study showed that although rents in Dubai are improving at a record pace, they remain below 2014 peak values for apartments and villa rents, respectively.
By the fourth quarter of 2022, city-wide villa rents should reach 2014 levels, followed shortly thereafter by apartment rents in Dubai, Houzon predicts.
Having seen Dubai rental increases of over 25 percent in most districts, Nishchay Mehra, Managing Director at Houzon, says such an increase is unsustainable, significantly impacting affordability, and causing tenants to express increasing concern.
The challenge of renewing or moving when facing a nearly 25 percent increase in rental costs is exacerbated by the fact that tenants consider connectivity to the workplace, school, and community amenities when choosing a rental property in Dubai.
Due to the rising cost of living in Dubai not matching salary increases and the significant decrease in disposable incomes caused by ongoing rents, many tenants are forced to downsize, relocate to affordable areas, or buy because rental outflows in Dubai exceed mortgage payments.
Among Houzon estimates, the Palm Jumeirah apartments recorded the highest rent rise, at 38 percent per year, followed by Downtown Dubai apartments (37 percent) and The Greens and The Views apartments (both at 37 percent).
A sharp increase in rent was also recorded in outer districts, the consultancy reports, with Discovery Gardens seeing a 27 percent rise, followed by Dubailand (25 percent) and Dubai Sports City (21 percent).
UAE Hills (42% increase) and Palm Jumeirah (41% increase) saw the steepest and fastest year-on-year rent increases, followed by Jumeirah Village Circle (28% increase) and Springs and Meadows (20%).
Many tenants are citing the RERA Rental calculator as protection from landlords who have been in a downward market for a while, says Mr. Mehra.
For the latest updates on rising rents in Dubai, check back with Houzon to learn more.