Dubai: Stick with the landlord you know seems to be what tenants in Dubai are doing these days, with lease renewals outpacing new contracts across most major communities, estate agents say. These renewals are also dictated by a sharp reduction in the number of new yearly rental homes coming to the market, with more property owners diverting their units into the short-term rental market for the Qatar World Cup and beyond.
This means that in many cases the majority of units at a newly completed building in a popular residential location ends up as short-stay options. Market sources say this is happening far too frequently these days, as short-stay rental rates are flying off the charts (depending on the property and, of course, location) through the World Cup phase and a further bonanza expected in the last 15 days of the year. (Market sources are confident this uptick will continue through most of January as well.)
Which sort of narrows the options for residents wanting to move into a new home on annual lease. Plus there is the additional cost.
Gap widens between new rents and renewals
The difference between paying a higher rental to renew a lease and enter a new one elsewhere had widened to between 15-25 per cent, depending on the neighbourhood. Which explains why tenants are more willing to opt for renewals than have to pay a lot more in renting new.
“The longer it takes a resident to decide between renewing or a new lease, the higher he will be forced to pay,” said an estate agent. “Landlords are receiving multiple booking offers on the same unit, and rental demands are increasing by the week.
“They also realise there’s not enough stock available, whichalso forces potential tenants to make decisions fast. And they doing that by signing up for renewals, even if they think their landlord is being unfair by hiking the rate 10-20 per cent.”
On average, existing tenants are seeing on average 10-20 per cent demand hikes at the time of renewal.
A 20% plus hike becomes norm
For instance, Downtown Dubai recorded a sharp increase of 24 per cent in average rentals on apartments, while Dubai Hills Estate ‘recorded the highest increase of 33 per cent for rental villas in Dubai’ by end September, according to data from Zoom Property.
Now, these are not isolated cases of in-demand locations generating sharp rent increases. “The prime areas - Palm Jumeirah, Downtown Dubai, Dubai Marina and JBR - are performing exceptionally well,” said Ata Shobeiry, CEO of Zoom property. “2022 will end on a very strong note for the rental market as FIFA World Cup 2022 Qatar is giving the short-term rental a remarkable boost.”
"In the current market, where possible, tenants should aim for a renewal because they stand a better chance of keeping their rental payments lower," said an estate agent. "The rental market in Dubai continues to run hot, all new contracts are well above the market average."