Nobody could really ever profess to fully understand the intricacies of the property/rental market in Dubai. Forecasters continually tend to be very much wide of the mark with their insightful outlooks on what the future may hold, the latest example being the first three months of 2015.
Rentals actually increased across the first quarter by an average of 4%, in stark contrast to the industry expectations of a decline. The predicted decline was in the most part put forward as an apparent result of an increase in completed residences, but this failed to materialise.
This has given landlords across the emirate the green light to jack up their rental prices, with some tenants in Dubai Marina reporting that they have been told to expect a 20% increase if they want to renew the lease.
kick up the RERA
Quite where the calculation comes from for such excessive hikes in anyone’s guess, but if you consider 20% or more to be a touch over the top, you can calculate the actual annual rental figure by using the Government’s RERA rental index calculator.
In essence, if your current rent is within 10% of the average within your area, you’ve no need to be paying more. If you are paying between 11% and 20% less than the average, you should expect a maximum of a 5% increase.
Landlords seem somewhat fixated on maxing out on their take, a trend which has never really veered from its path, even when the property market collapsed in 2009. Sadly though for tenants, the award of the Expo 2020 to Dubai in November 2013 created projections that millions more expats would be encouraged to move here as a result of the large trade show rolling into town.
Despite not being too sure what that type of prediction is based on, the landlords, as you can imagine, needed no clarification or further encouragement to get those prices up real quick.
enjoy it while it lasts
The message though is that they had better make the most of it, because newer, more modern and most importantly – cheaper areas are going to continue to spring up over the course of the next few years. Many buildings in some of the more expensive areas of the city are becoming slightly haggard now, and the frankly overblown prices – combined with the poor traffic flow – means that the appeal of places such as the Marina and JBR will undoubtedly become diluted as the city moves on, and further outwards.
In other news, we have seen that property prices have slowed and gone backwards, so although the smart money probably wouldn’t go in on the Dubai property market just yet, it’s something worth thinking about.