Having observed the limited rent rise in freehold communities, it is expected that rents are moving towards stability. A significant difference is observed in total rent rise for second quarter and first three months of this year. Only 1.4% rises are observed as compared to 1.5% during initial months. Tenants become well aware with their rights and rent cap legislations implemented by RERA for yearly increase in property rents. Tenants are now aligning their decisions with the legal compensation forums under the Dubai Land Department.
Landlords are experiencing tough resistance on increasing rents from tenants whether existing, or new one. The upper end of rental market is showing low growth. Although rents are showing noticeable reduction of growth rate, overall property rents in Dubai maintain a positive growth which is expected to persist. Furthermore, the mid and lower end of freehold rental market also shows some decrease in rent rises. Fresh supply of newly residential projects in locations like Dubai Silicon Oasis, Sports City and Motor City are also believed to be the reason of slow rises in rents.
During the past 12 months property rents were increased to 20% and it is observed that such huge rises always resulted by pause duration. This is what currently rental market in Dubai is experiencing, the slower growth in rent rate with falling rent across Dubai. Another reason for this slow rental growth is the hot summer in Dubai. During the summer, landlords started showing flexible attitude on price to prevent their property being vacant.
Despite all this slow growth in rent rate and fall in rent rate, if renting property in Dubai is still expensive for tenants, they can relocate to Sharjha, the affordable rents attract Dubai based workers to its neighboring emirate. Whereas limited supply of property units in Sharjah increases the rents during second quarter by 5.7% in second quarter after the steep rise of 10.8% in first quarter. In addition to individual home seekers, it is also observed that several business owners from Dubai are also looking for bulk quantity accommodation units for their staff in the emirate. The rise in demand for rental property in Sharjah dragged tenant attention to know the legal system overseeing rental disputes. Now tenants don’t agree to accept further increases in rents. It has observed that rising rents increase the number of rental disputes filed at Sharjah Municipality.
The increased awareness among tenants allows them to object to any proposed rises in the rent at the end of their tenancy contracts. It is also expected that in addition to stabilise the property rent tenants also prefer staying in their current accommodation to save their money.
The stability of rents across Dubai also benefited buy-to let- investment sectors Moreover, RERA rental index upgrades and Tenancy registration system also lure investors showing them proper legal infrastructure to support investors.
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