Dubai Are landlords getting too greedy Data shows the real reason why rents are rising

Dubai Are landlords getting too 'greedy'? Data shows the real reason why rents are rising

While it is true that rents have increased, are landlords the only ones responsible for this trend? The current state of the Dubai rental market is becoming more apparent thanks to new statistics.

In Dubai, the difference between requesting and bid rental rates for short-term or long-term apartments in Dubai has been growing as landlords are being incentivized to seek higher fees due to a lack of available inventory and rising demand.

According to executives in the real estate sector, there are some regions of the emirate where the difference between the sale prices of vacant and rented units is as much as 50%.

Because the demand for residential real estate in Dubai is greater than the supply, property values and rentals have been steadily increasing throughout the majority of the city's well-known neighborhoods, surpassing their 2014 highs.

Ultimately, the perception of landlords as "greedy" reflects broader societal concerns about income inequality, housing affordability, and the ethical responsibilities of property owners. As the conversation continues to evolve, stakeholders need to engage in constructive dialogue and explore solutions that promote fairness and sustainability in the rental market.

What does the latest data say?

The population of Dubai increased by almost 25,700 during the initial quarter of this year, according to the most recent data. However, just 8,350 apartments were supplied between January and March; as a result, demand is exceeding supply and, from a rental standpoint, Dubai is becoming a landlord market.

The rising gap between requesting rent and tenant offers is a problem in the emirate's thriving rental market, according to Sachin Kumar Singh, managing partner and head of business at Foremen Fiefdom.

Tight supply and strong demand are driving this trend, with some areas seeing up to a 50% difference in selling values between rented and unoccupied units, based on location and viewpoint. The growing difference in rents between occupied and unoccupied homes represents a substantial departure from previous patterns. After the housing crisis of 2008, rented units usually had lower prices than unoccupied ones. The current state of affairs emphasizes the careful balance that rent stabilization laws must strike, according to Singh.

While unduly onerous laws may discourage property maintenance, he continued, loose rules may result in unchecked rent increases that strain affordability. Thus, the secret to guaranteeing a robust and long-lasting rental sector in Dubai will be to adopt a balanced strategy.

Requesting and Bidding

The leasing team's supervisor at Huspy, Usama Sukhera, concurred with his colleagues that there is an increasing disparity between requesting and bidding in the rental market.

The difference between bid and ask prices has increased seven times between January 2023 and January 2024. After the change of the Real Estate Regulatory Authority (RERA) computation and the steps being taken by the Dubai Land Department, I feel that the gap should be steadier this year," he said.

The RERA calculation, which was recalculated on March 1, 2024, to better correspond with open-market costing, is anticipated to help lessen the difference between extensions and new rentals, according to Prathyusha Gurrapu, director & head of research and consulting at Cushman & Wakefield Core.

Tensions about the value surge of the villas or apartments for rent in Dubai are predicted to abruptly slow down as a result of the calculator's calibration. Landlords in Dubai will also be able to request rent revaluation only with a court ruling as of April 1, 2024. If they think they have a right to a higher seeking rent than what the revised Rental Index suggests, Dubai landlords can still apply to Rera for a rent revaluation, the spokesperson said.

Date: 24 May, 2024

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