Dubai: Landlords in Dubai, particularly those renting out in freehold areas, are far more likely to ask for a single-cheque payoff as demand keeps running well in excess of actual availability in most locations. It also means that the days of landlords willing to offer multiple cheque payments – even up to 12 cheques in some instances – have dropped significantly.
“We saw a 6 per cent increase in tenants paying with one cheque during 2022 and a 4 per cent fall in four cheque payments,” said Richard Waind, Group Managing Director at Betterhomes, the property services firm. “Multiple cheque payments fell - but slightly.” (Multiple cheque based lease agreements became popular during the peak Covid phase, and there were several landlords who allowed direct debit of payment through credit cards to help tenants meet their obligations.)
Other property companies are saying the same – that landlords are demanding and getting single cheques along with lease agreements. “We are seeing a lot of that happen, especially when the tenant is a relative newcomer to Dubai,” said an estate agent. “Landlords, by and large, would prefer to get all their payments upfront, and in a way they are taking full advantage of the demand.
“But it does place tenants at a disadvantage, if they find they have to pay off all of thei annual rent in one go. Those with their employers taking care of the payment can do so, but it can be quite tiresome for everyone else.”
Landlords hold the decisive edge
All through 2022, landlords found themselves in a position of strength, with rent increases at popular locations in the 20 per cent or more range. Even in those locations where new homes were handed over in fairly high numbers, most of those were pre-let at higher than the average rentals.
“We witnessed a rise in rents of 36 per cent on average last year,” said Waind. “The lack of supply - for villas in particular - is acute, and we saw villa rents rise at the fastest rate. It should be remembered that rents have been rising rapidly, but from relatively low levels pre and during the pandemic.
“On average, rents remain lower than previous peaks.”
Another year for increases
Industry sources say that 2023 will in all probability see more rent gains across the board, with emerging locations likely to close the gap on rent gains with 15-25 per cent increases of their own. Plus, it will be another two years at the least before today’s offplan projects reach a point of handover, and in significant numbers.
More property firms are saying that by November, there were fewer rental listings showing up in Dubai, which added its bit to the heavy pressure on rents. Betterhomes’ data shows the number of listings handled by the firm last year was 24 per cent down on 2021.
How are the rents looking?
A two-bedroom apartment in Business would average Dh105,526 for an annual contract, and that’s up 22 per cent from a year ago. Head to nearby Downtown Dubai, and that becomes Dh125,814 on average. That’s higher by 21 per cent on 2021.
A JLT location still would offer two-bedroom units at under Dh100,000, for Dh91,948 on average, a gain of 22 per cent. At Dubai Creek Harbour, the rent increase has been quite intense, at Dh104,808.
For 2023, only the pace of year-on-year increases could see a slowing down. But not by much…