Louise Heatley, the Owner and Managing Director of Exclusive Links Real Estate Brokers, acknowledged in a recent interview that some tenants are being forced out of their current properties due to soaring prices. Heatley points out that in JVC specifically, buying a property can be more affordable than renting one, with mortgage payments equivalent to previous rent payments. The high demand for properties in this area has also led tenants to explore other areas such as Arjan, Al Furjan, and DAMAC Hills, all of which are excellent offerings in the Dubai real estate market. In some extreme cases, Heatley has seen clients opt to leave the city altogether due to the increasing rental prices.
In extreme cases, some clients have opted to abandon posh 2-bedroom apartments in areas like The Greens and relocate to larger 4-bedroom villas in areas like RAK. The upgraded transportation system facilitates these types of moves, which take them farther away from the Dubai real estate market.
Betterhomes, a leading agency in the Dubai real estate scene, has noticed a rise in tenants opting for smaller properties. According to Senior Leasing Manager Jacob Bramley, this is a trend that they have seen occurring more frequently. Tenants are either choosing to stay in their current community but downsize or expanding their search to include properties in different areas that may not have been their first choice earlier. This is not to say that renting in Dubai is out of the question. It is merely evolving. After the rental index calculator was recalibrated, property owners were able to propose significantly higher rent increases compared to previous years. As a result, tenants are now forced to carefully weigh their options and decide if they should renew at a higher rate or look for a more budget-friendly alternative elsewhere.
Recently, landlords have been taking advantage of the 20 per cent maximum increase allowed on rental prices during renewal. As a result, tenants are feeling the pressure to consider buying homes instead. This increased demand for housing is further driving up rental prices as expats are also purchasing properties to live in rather than solely as investments, causing a decrease in available supply in the market.
Residents in the upper-income bracket are likely exploring their choices to purchase a home and enter the real estate market, as they have the means to cover the necessary down payment.
However, residents on a budget should consider the larger financial implications, including the rising cost of living. Nevertheless, there is always a case to be made for buying instead of renting since it typically makes more sense in the long term from a financial standpoint.
The rise in rental prices over the past year and a half has had the greatest impact on communities in the mid-range segment, such as JVC. There has been a noteworthy increase in tenants interested in purchasing the property they are currently renting, particularly within the mid-range price category. Some are also considering established neighbourhoods with central locations, like townhouses in The Springs or more reasonably priced apartments in Dubai Marina. The frustration with increasing rents has led many residents to look for read-to-move-in properties instead of continuing to rent or downsize.
With constant increases in rent, budgeting has become a challenge for many, causing a feeling of uncertainty. Purchasing a property with a set monthly payment that is less affected by market fluctuations provides a sense of security. Furthermore, the UAE's prospering economy and reputation as a safe haven have drawn more people to move here. Additionally, the ongoing expansion of Al Maktoum International Airport is projected to bring in over a million residents. This growing demand is surpassing the available housing options, resulting in higher rental rates. Dubai's real estate market remains highly sought after, with both investors and buyers showing strong interest. The first quarter of 2024 saw record-breaking transaction numbers, as Dubai attracted a significant number of investors and secured over 34,000 deals — a 20 per cent increase from the same period in 2023. This surge in activity is expected to drive rent prices even higher, according to experts.
According to Bramley from Betterhomes, the increasing number of rental inquiries indicates a high demand for rental properties in Dubai, particularly with the growing influx of migrants. This trend suggests that prices will continue to rise throughout the year. Bramley also predicts that the ongoing rent hikes will push more residents towards purchasing their own property instead of continuously renting as Dubai becomes increasingly desirable as a long-term place to live and a sound financial investment.
Experts predict that the Dubai real estate market will experience an increase in buyers in the coming years. This can be attributed to two main factors: the steady rise in rental prices and the sale property prices. Moreover, the emergence of new master communities with well-developed social amenities like schools, shopping centres, and medical facilities is drawing in a larger pool of potential buyers.