Gap between asking and bid rates widens as landlords raise rents

Dubai rental market

In Dubai's rental market, the gap between asking and bid rates has been widening, reflecting the growing demand and limited supply of residential units. Real estate experts note that in some areas of the emirate, the difference between sale prices of rented and empty units can reach up to 50 percent.

The surge in property prices and rents in prominent areas of Dubai is primarily driven by the local population growth outpacing the supply of residential units. This trend has led to landlords demanding higher rents, with some residents perceiving them as exorbitant and driven by greed.

According to recent data, Dubai's population increased by nearly 25,700 in the first quarter of the year, while only 8,350 units were delivered during the same period. This disparity between demand and supply has tilted the rental market in favor of landlords, creating a landlord market perspective.

Sachin Kumar Singh, business head and managing partner at Foremen Fiefdom, highlights the growing disparity between asking rents and renter offers in Dubai's booming rental market. Singh notes that the widening gap between rents for occupied and vacant properties signifies a significant shift from historical trends. Previously, rents for occupied units were typically lower than vacant ones. Singh emphasizes the need for a balanced approach in rent stabilization regulations to ensure a healthy and sustainable rental market.

Usama Sukhera, leasing team leader at Huspy, also observes the widening gap between asking and bidding rates in the rental segment. He notes a significant increase in the gap from January 2023 to January 2024. However, Sukhera believes that with measures taken by the Dubai Land Department and the recalibration of the Real Estate Regulatory Authority (RERA) calculator, the market should stabilize.

Prathyusha Gurrapu, director and head of research and consultancy at Cushman and Wakefield Core, discusses the recalibration of the RERA calculator on March 1, 2024, to align with open-market pricing. Gurrapu anticipates a reduction in disputes over rental increases due to the revised calculator. Additionally, landlords in Dubai can now seek rent re-valuation only with a legal order starting April 1, 2024, which is expected to further regulate the rental market.

Jacob Bramley, senior leasing manager at Betterhomes, notes that owners often price their properties aggressively due to high market confidence. While recent increases may allow owners more margin since accepting lower prices in previous years, achieving asking prices or close to them is possible with a willingness to accept a vacant period.

Overall, the widening gap between asking and bid rates in Dubai's rental market reflects the dynamics of supply and demand, with various factors influencing landlord pricing strategies and tenant negotiations. Balancing regulations and market dynamics will be essential to ensure a fair and sustainable rental market for all stakeholders.