Tenants are resorting to the Real Estate Regulatory Authority (Rera) rental index as landlords are increasingly hiking rents and serving eviction notices.
Rents have been on the rise in Dubai after the Covid-19 pandemic, with apartment rent increases now approaching the same rate as villas. Due to the shortage of villas and townhouses following the pandemic, rents were rising faster for them than apartments across the emirate as tenants increasingly opted for bigger spaces.
“Landlords who have been in a downward market for a long time and are looking to capitalise on favouring market conditions are pushing to increase rents during renewals – while many tenants are resorting to the Rera rental calculator to protect themselves from such increases,” says Prathyusha Gurrapu, head of research and advisory at Dubai's off-plan and secondary property sales hit 12-year high in third quarter, a real estate advisory and consultancy.
“We are witnessing many cases of 12-month evictions or refurbishment notices being served to tenants where landlords are trying to get the unit vacant and [bring it] back in the market,” she adds.
However, Gurrapu pointed out that some landlords leverage the rental valuation certificate to increase rents during renewals, but until Rera officially announces that the rental valuation certificate supersedes the Rera rental index, the rental index remains applicable for rental renewals.
“The rental valuation certificate applies to a vacant property, and not for a rent renewal,” she added.
High rental growth is not sustainable According to Dubai's off-plan and secondary property sales hit 12-year high in third quarter’s third-quarter report, the rental market in Dubai is witnessing steeper rises as villa and apartment rents across the city are up by 28 per cent and 26 per cent, respectively.
Apartments in Palm Jumeirah continue to lead with a rental rise of 38 per cent, followed by Downtown (37 per cent) and The Greens and The Views (37 per cent). The outer districts such as Discovery Gardens (27 per cent), Dubailand (25 per cent) and Dubai Sports City (21 per cent) have also picked up momentum, and have seen sharp rises in rents compared to Q3 2021.
In the villa segment, the steepest rise in rents was again seen in Emirates Hills (42 per cent) and Palm Jumeirah (41 per cent) followed by Jumeirah Village Circle (28 per cent) and the Springs and the Meadows (20 per cent).
“As most districts have witnessed over 25 per cent increases, such a sharp rise in rents is not sustainable. This is significantly impacting affordability and is a growing concern amongst tenants,” Gurrapu noted.