Dubai: The rise in rents experienced by all the established locations in Dubai has finally reached Dubai South in full force.
Tenants who had been living in the sprawling mixed-use development for some time have certainly been feeling it, with lease contracts getting renewed at 15-20 per cent higher than what they have been paying. This has been particularly noticeable in renewals done through the summer.
Property market sources say that Dubai South rentals are experiencing a ‘leveling up’ as landlords enforce higher rates on lease renewals. This is as per the flexibility allowed to landlords by the revised RERA Rental Index, which went into effect April.
“You had existing tenants who were paying 20 per cent or even 30 per cent lower than the prevailing market rate for a Dubai South apartment,” said a broker. “Typically, these were tenants who had leased 2-3 years ago and were paying rentals prevailing during the Covid year. That’s all changed since April.”
New tenants too are paying a premium
Dubai South is recording significant numbers in homes newly delivered, many of which are now being rented out. In July alone, 425 new leases were signed for homes at the master-development, the second highest monthly tally since January, when 471 new leases were entered into, according to data from Reidin-GCP.
“In Dubai South, rental transaction volumes have consistently been rising month-on-month for the last 12 months,” said a spokesperson for Reidin-GCP. “This reflects not only the desirability of the various community-style living options there but also the increasing availability that tenants can choose from.
“This is expected to steadily increase as Dubai South gradually takes over as being the focal point for the mid- and upper mid-income segment of the residential market.”
In August, early estimates suggest that more than 500 new leases were signed.
According to feedback from residents who had moved into Dubai South recently, rents offered were significantly higher than what was available in January or February. “Everything changed after the April RERA Rental Index update,” said the broker. “New leases rose and renewals too had to go up.”
What are rents looking like?
Current listings for Dubai South homes show a one-bedroom asking for Dh58,000, while a two-bedroom option is upwards of Dh80,000 a year. Adding to the pressure on rental values is the high demand for staff accommodation for newly completed buildings.
So, there is a situation that even with all the new apartments being readied, this has had zero impact on what landlords are asking for in that location.
Rent renewals
For existing tenants, many of whom chose Dubai South for its affordable rentals, it still makes a lot of budgetary sense to renew. Except for April, lease renewals for Dubai South residences averaged well over 250 a month, with May recording the highest of 309 and July following close behind with 294, according to Reidin-GCP numbers.
More to follow...
