There is no sign of a rental cool-off in Dubai's residential property market to date. However, landlords with new apartments to rent out seem to be more flexible on rent and payment options.
Searching for a new apartment to rent in Dubai after the current landlord demanded a steep ‘above market average’ increase for a renewal?
They will do well to look for potential options in relatively newer buildings or just about to get delivered. There, the chances are you may find landlords willing to consider rental rates more in keeping with what you have in mind.
“New landlords in recently handed-over properties with lower occupancy levels may be more flexible in negotiating overall rental terms,” said Prathyusha Gurrapu, Director and Head of Research & Consultancy at Cushman & Wakefield.
These landlords could even consider allowing payments through more than four cheques. “The number of cheques remains a negotiable factor (with new landlords), because this is largely influenced by occupancy levels and demand for a particular property,” said Prathyusha.
“We've also observed that large institutional landlords like Wasl (which is Dubai Government owned), are more flexible by offering monthly payment options and accepting various payment methods, including cheques or electronic transfers.” (Recent rental projects from Wasl, whether in freehold or non-freehold locations, were instantly leased out.)
New landlords in recently handed-over properties with lower occupancy levels may be more flexible in negotiating overall rental terms.
Landlords still prefer the fewer cheque option
Rental payments using 6-12 cheques have always been favoured by residents here, but have found less traction with landlords at most times. These were typically made available during the initial Covid phase, as well as during times of great global financial crisis which had its effect on the local economy.
Market sources say that individual landlords with new properties in developments such as Town Square, the Damac Akoya, and elsewhere are showing such flexibility on payments.
No cooling off on Dubai rents so far
Across Dubai, there are sizeable numbers of residents still looking out for new apartments after getting hit with the latest rental hike demand at their current abode. Many of them had delayed switching to new rented homes over the last year hoping that 2024 would see some stability on rental increases. Even some cooling off.
That definitely hasn’t happened, more so with the RERA Rental Index being updated in March this year, which allowed landlords in the city the flexibility to increase rents to match the average rates in their areas. That in effect meant going all the way to 20% hikes (and even more, according to some tenants).
Nearly all areas in the city are now seeing rents ‘levelling up’, with ‘affordable districts experiencing the sharpest increases’, according to the new Cushman & Wakefield report.
Check out apartments in Discovery Gardens. They are up 32% on average. How about Dubai Sports City? A gain of 28% year-on-year. And Dubailand options have already seen a 24% rent increase on new leases.
"After the RERA Rental Index update most districts have seen increases in the range of 8-15%," said Prathyusha. "Despite this, we have seen a higher number of renewals compared to new leases." Interestingly, the number of rental listings that showed no change in asking rate was nearly identical during H1-2024 and H1-2023. In fact, nearly 21% of rental listings in the first half of this year actually saw the asking rate is lower compared to 17% that did so in H1-2023.
Rents are leveling off in this category
There are some residential areas where rents are starting to stabilize, or even drop. On Palm Jumeirah, new leases on a villa are seeing a 7% dip on average, says the new C&W report. The Palm Jumeirah was where this current rental increase run started, in late 2020-early 2021. Residents elsewhere in the city will be hoping that this trend when it comes to Palm villas will start happening for them too.
"We’ve also observed a relative stabilisation in city-wide villa rents, which have risen by 13% year-on-year, whereas apartment rents are up by 22%," says the report.
"Villas in Jumeirah Village Circle saw the highest year-on-year increase by 40%, followed by Jumeirah Park (22%) and The Springs and The Meadows (at 14% each)."