As rental prices in Dubai reach unprecedented levels, more tenants are becoming increasingly price-conscious and are on the lookout for budget-friendly alternatives. Real estate consultants report that property owners in more affordable areas such as Dubai South, Town Square, and the Northern Emirates are witnessing a surge in interest from potential tenants. This heightened demand is driven not only by new residents moving to Dubai in pursuit of better opportunities but also by existing tenants seeking more affordable housing due to rising rents.
"Affordable communities have continued to see significant rental growth in relative terms. This trend underscores the strong demand for 'affordable' housing options, with price being a crucial factor for many tenants. Consequently, while landlords in these areas have experienced increased interest, occupancy rates, and rental prices, prospective tenants remain highly sensitive to price. This could make it challenging for landlords in upscale locations to attract and retain tenants," stated property management firm Asteco.
James Joughin, executive director for advisory and valuation at Asteco, noted that many long-term tenants are facing substantial rent increases in their current homes, especially after the update to the Rera rental calculator in March 2024. "The push to find more affordable housing has led to increased rental activity and rent hikes in the lower and mid-end segments. This trend has benefited affordable communities within Dubai, such as Dubai South, Damac Hills 2, and Town Square, as well as the Northern Emirates, which offer lower rents and attract tenants with their growing supply of quality developments, improved infrastructure, and enhanced accessibility," explained Joughin.
Dubai's property market has seen extraordinary growth over the past two years, resulting in a significant imbalance between demand and supply across residential communities. "This has naturally led to an increase in average letting prices across the market, particularly in popular areas like Palm Jumeirah, Dubai Marina, and Jumeirah Beach Residences. However, the market is working to keep pace with this demand," said Lewis Allsopp, chairman of Allsopp & Allsopp Group.
In response to rising rentals, one of the most notable trends is the rise of flexible payment plans. Landlords are increasingly offering options to pay rent in four or more cheques, helping tenants spread out their costs and manage their budgets. "This allows increased affordability despite rising rental costs. This increase in available units also provides tenants with more options and empowers them to seek better value in terms of location, size, and amenities," said the chairman of Allsopp & Allsopp Group.
Lewis Allsopp added that upscale areas in Dubai, including beachfront communities and prime locations like Downtown Dubai, DIFC, and Business Bay, continue to attract strong demand, reflecting the increased preference for the lifestyle, convenience, and world-class amenities these areas offer. "Our latest market snapshot reported a 19 per cent rise in lettings transaction volume, indicating a strong level of activity. This could suggest that despite rising rents, tenants who prioritize the unique benefits available in upscale areas are willing to pay a premium," he said.
James Joughin of Asteco noted that while the luxury rental market remains relatively insulated from affordability constraints, tenants in mid-range and upper-scale locations are becoming more price-sensitive. "Observations indicate that properties priced above prevailing market rates tend to experience longer vacancy periods and often require price adjustments to attract tenants. This suggests the existence of a discernible price ceiling in these segments," he added.
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