To rent or not to rent?

To rent or not to rent?

Dubai apartment rents increased by up to 25% in some areas, and are expected to increase for the remainder of this year, reaching 2014 levels by the end of 2022. Dubai Marina had the highest price surge, followed by Palm Jumeirah, Jumeirah Beach Residence, Jumeirah Lake Towers and Jumeirah Village Circle, Greens. Higher rents didn’t go past the more affordable areas such as Deira, Dubai Sports City and Jumeirah Village.

The biggest demand was seen in the mid-to-high-end segment, but in more affordable areas. Young professionals and high net worth people are now more and more attracted to the Emirate due to the new convenient economic and visa reforms. According to Dubai Statistics Centres latest data, Dubais population has increased by over 100,000 since 2020, crossing 3.5 million mark in April for the first time.

Another trend that we observe is that young and middle-aged residents who want to stay in Dubai on a long-term basis are choosing to buy properties rather than rent them. This trend is mainly observed among people between 20s - 40s, as they try to invest to hedge against inflation. Because of this most brand new projects were sold out almost on the day of the launch. 

Even with the positive immigration dynamics, analysts predict that the rent prices will only continue to pick up throughout 2022. Rental market will balance out and start favouring the landlords after being tenant friendly in recent years. Experts think that Covid-19 will continue to have an impact on remote working, driving the demand and prices on villas and larger real estate rentals. Larger properties have been more popular among long-term renters, as big work and living changes continue to happen today. According to the industry experts, villa prices can go up 15% in the coming quarters, as demand is up because of new residents.

The chief executive of Zoom Properties commented that rents are expected to sustain an upward trend for properties in prime areas of Dubai as the emirate attracted worldwide investors following its successful drive against the Covid-19 pandemic and recent visa reforms.

Some experts write up the increase in rents to inflation and higher cost of living and think that rising interest rates will also push forward rent price increase in Dubai. It provides a convenient tax system, high quality living situations, safety and security. Also improving corporate and residency laws will push forward the demand for residential units.

While apartments, townhouses, and villas rentals went up 33 per cent, 25 per cent, and 64 per cent, respectively, they dropped in the number of inquiries and active listings hitting the market. Currently, most of the demand is from long-term rentals, but things will change with the beginning of the tourist season. The short-term occupancy is estimated to reach 85-90% by the end of the year.

Experts have a positive prognosis for the rental market in Dubai for the rest of this year. Regardless of the fluctuations, they still think that long-term rentals and even more so purchasing property in Dubai is a good investment.

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