Dubai rents: Tenants in older buildings can negotiate with landlords
Renters of some of Dubai’s old properties will have room to negotiate with the landlords as new supply comes on the market.
The big real estate companies think that building owners in older buildings will need to provide a bit of a bonus to keep things busy. But rents might come down in some neighborhoods with strong new supply coming in 2025.
Also, more cheque payments, longer-term rentals and property renovation to make room for new residents will be the dominant tenant-landlord arrangement in Dubai in 2025 with rents going up again next year.
But industry insiders say rents will rise again in 2025 – just not as fast.
Leases will be raised around 10 per cent in 2025 in the emirate and good new supply will be added to the market.
Betterhomes director of leasing Rupert Simmonds said landlords have seen the benefit of several years of higher rents. But the explosion of increases in the past couple of years is unlikely to last.
"Therefore, landlords might favour longer-term rentals in order to guarantee an income and cash in on the current state of the market. There is no fun in moving for tenants after having been paying huge rent increases over the years. People now want the certainty of longer terms, and so tenants remain for longer periods of time. This makes both parties happy — giving tenants security, and landlords lower turnover and fewer vacant homes," Simmonds continued.
"One thing is dictating the rental sector in Dubai — the speed of new property sales is being resisted by a population that is exponentially expanding. Global immigrants visit Dubai for the lifestyle advantages, its friendliness, 365 days of sunshine, cultural variety and financial benefits", Simmonds explained, saying that rental prices are projected to stabilise by 2025 in the face of affordability, growth in neighbourhoods within commute zones and changing patterns of supply and demand.
More cheque payments
Citing new fads, Haider Tuaima, director and head of real estate research at ValuStrat, explained that some villa landlords might have to tolerate cheques paying in bulk, and maybe even need to renovate the home to attract renters. "Tenants will be able to ratchet up rent in part and existing tenants will see no rent hikes," he said.
Ramjee Iyer, chairman and managing director, Acube Developments said there might be some wiggle room in a few cheques from smart landlords looking to cater to a wider pool of tenants as there are so many people coming to Dubai. "The industry of holiday rentals, which is exploding at the minute in the emirate will also be more open," she said. At the tenant side, same as 2024 – the appetite to look outside the main Dubai metro zones to get more space and more for their dollar," said Iyer.
Rents may go down when new supply is created
Ramjee Iyer: Rents won’t be reducing that much in Dubai in 2025.
"But some markets might stabilise, even fall a bit in 2025, because of more supply. They’re largely non-prime communities where there’s most new properties coming up. Some include International City, Al Quoz, Dubai Studio City and so on," he said.
There will not be any massive drop in rents, but if there is localised decline, Rupert Simmonds at Betterhomes told me that it might be seen in markets where there is a lot of new supply and little demand, such as Jumeirah Village Triangle (JVT) and Dubai Land Residential Complex.
"As more handovers come and go, landlords will probably cut prices to stay competitive. Additionally, old units in once hot areas such as Bur Dubai and Deira might be asked to drop rent to keep up with new projects with more amenities," he said.
Yogesh Bulchandani, CEO of Sunrise Capital: ‘There can be some stabilisation or slight declines in some areas in Dubai where there is a huge amount of construction and overcapacity. "Locals further out of the city’s core commercial centres or mid-range rent markets might see a cooling off," said McCreary.
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