What to look for in Dubai’s rent rise as new houses are hampered?

We know Dubai for ultramodern architecture and lavish shopping. This city has the
world’s highest skyscraper ‘Burj Khalifa”. It is a cosmopolitan metropolis with a focus
on tourism and hospitality. Oil revenue supported an increase in the city’s
development, as it was already a mercantile hub. Dubai’s economy relies on trade,
tourism, aviation, real estate, and financial services.


The Al Maktoum family rules Dubai and the ruler His Highness Sheikh Mohammed
bin Rashid Al Maktoum is also the Vice-President as well as Prime Minister of the
country. His Highness is also the Supreme Council of the Union (SCU). Dubai is a
constitutional monarchy.
Dubai is a hub for service industries like information technology and finance.
Recently, many IT industries have opened their branches in Dubai wherein
employees are outsourced. Also, they have value-added services for expanding the
startups in Dubai and help them connect to new ventures.
Since they outsource, most of the workforce, apartments, and villas are in demand.
Many expats are staying for rent and that makes it easy to commute to their
workplace.

Recently, the pandemic has made every life hard. So many jobs were lost and their
livelihood was gone, and that made them struggle to pay their rent. Added to it, the
increase in the rents had pinched their pockets and their struggle has increased.
The apartment’s rent was increased by 8% during the second part- and also verified
that it will be short-lived. It’s because over 200,000 new apartments are about to be
handed over to the respective owners in the second half of the year. Already about
9000 apartments were handed over in the first half.
The increases appear to blow up as fresh supplies exceed in population. For the
past eight months, there is so much turnaround happening on property sales, and on
rents, there were selective increases.
However, some communities and terminus, like Downtown and Palm, have been
showing a glimpse of rental increases, as the property owner has asked for the
increased rates. Although the new 20,000 apartments will have the obligation of
making the rent, go less after they complete it.
But in the last 5 years rent has been reducing up to 20 –25 percent, since showing
steadiness at the start of 2021.


Budget Hotspots:


Some locations that are cutting include the International City, wherein the second
half, rents came down up to 12 percent from the previous year. If a two-bedroom
would range between Dh 35,000-Dh 45,000, meanwhile, a one-bedroom would range
between Dh-20,000-Dh 35,000.
The Sports City Apartment towers are stabilizing on the rental side, as a two-
bedroom at Dh 37,500-Dh 62,500, while a one-bed is rented for Dh 27,500-Dh
42,500.


Single-digit gains:


Popular locations such as Business Bay, Dubai Marina, and JLT are esteemed
neighborhoods that have documented rental increases, of the 3-4 percent range.
At Marina. a two-bedroom would be Dh55,000 plus category to Dh135,000 based on
the building and floor space.
If the occupant needs more open space and less upright living, a two-bedroom
house at Greens would be Dh75,000-Dh 115,000. Greens had a 6 percent increase
year after year.


Covid-19 and renting:


The upfront property owners in Dubai have raised the rental to 5-15 percent on new
contracts so that they can absorb Dubai’s three-year rent freeze on new tenants.
This will be a drastic change in the Emirate rental market if the new law surfaces.
These property owners try to balance the non-hike period and the cost of
maintenance during those three years if they hike their rents.

To swap this hike, they are offering one or two months rent-free or offer air-
conditioning. They are flexible on cheque payments. But they are not ready to sign a
contract as it will make them not hike rent if the market picks up.
We expect that for the next six or eight weeks there will be an increase in the leasing
activity, as residents will either keep the contract or shift from the place.
Asking for a rent hike is still risky as there is heavy pressure in the market, so they
have to wait for the demand to stabilize if they continue with it.


Revamping the new law:


This new law is applicable only for the new rental contracts, and it happens when
another 30,000 plus new houses are delivered to the market. They expect that this
law will increase the family stability, as the tenant will know the expenses and when
the time comes, it will prepare him for future endeavors. Also, the tenant will not
have to experience rental increases unexpectedly and has to frequently change the
premises because of this issue.

Priya
I, Priya Nagarajan, is a past Assistant Professor, mentor, tutor, counselor. Writing has always been a passion of mine and so changed my path to my passion. I believe language is the best way to convey your thoughts and dreams to get the results. I believe it takes a personal approach to reach individual success. I write with a flair for creativity and a keen eye for the professional.

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