Dubai's real estate market is anticipated to experience an increase in tenants vacating their leased properties in the upcoming months. This shift is propelled by multiple factors, such as the relaxation of rental increments in specific areas, an updated Rera rental calculator allowing for potential rate hikes, and a boost in the supply of new residential units.

However, some analysts and industry executives suggest that the high expenses associated with relocation could also lead other tenants to reconsider moving.

The first quarter of 2024 witnessed a 12% year-on-year surge in rent renewals in Dubai, with numerous tenants consenting to above-average rental increases. This trend underscores the tenants' inclination to maintain favorable landlord relations and avoid the risks, costs, and inconveniences linked with relocation, potentially settling for comparable properties at even higher rates.

Yet, this pattern might shift following the Rera rental calculator update. The revised calculator now offers a more precise reflection of market pricing, empowering landlords to implement substantial rent hikes at a time when market rates are finally beginning to ease, as per Asteco analysts.

Looking ahead, an increase in tenant movement is expected for several reasons, including the gradual easing of upward rental movement, the updated Rera rental calculator allowing for potential increases in existing rates, and a rise in supply from additional units being delivered to the market and existing tenants transitioning to home ownership, as stated by the real estate consultancy.

This implies that tenants in Dubai will be better positioned to relocate and capitalize on the improving market conditions.

According to the real estate consultancy Asteco, the growth of rental rates has been varied over the past three months, with average apartment and villa rental rates remaining relatively unchanged. Annual growth rates have decelerated to single digits, with villas at 6% and apartments at nearly 10%.

In its Destination Dubai 2024 report, global real estate consultancy Knight Frank disclosed that 261,243 homes are presently under construction or announced and are set to be completed by the end of 2029. This equates to an average of approximately 43,500 homes per year for the next six years – well surpassing the historical completion level of around 30,000 units.

Usama Sukhera, leasing team leader at Huspy, highlighted that with more projects being launched and new communities being handed over further away from the city centre, tenants have more options available at lower rental prices if they're willing to add 30 minutes to their commute.

The high cost of relocation is a crucial consideration for tenants, as mentioned by Jacob Bramley, senior leasing manager at Betterhomes. This factor has led many tenants to reassess their decision to move due to the inevitable expenses associated with relocation. The DLD rental index calculator governs rent increases, offering relief to tenants by restricting owners to request only half of the increase as per the calculator.

Furthermore, tenants entering new contracts also select properties based on the Rera index guidelines for second-year renewal, as expressed by Usama Sukhera.

Property buyers expecting increased returns on investments have contributed to the rise in rents, as highlighted by Usama Sukhera. To offset the impact of rent hikes, tenants in Dubai are exploring flexible payment terms and innovative payment methods through technology platforms. Additionally, downsizing and relocating to more affordable communities are being considered as viable options for mitigating rising rental prices, as stated by Sachin Kumar Singh, Business Head and Managing Partner at Foremen Fiefdom.