Most Dubai tenants stick with lease renewals as rents stabilise - even drop

Dubai: Renew the rental contract in June – and head for your summer break.

Whether it’s a tenant in Dubai Marina or Arjan, the same trends are showing up – stick with the existing landlord, negotiate on the rental demand, and sign off on the new lease.

All this even as Dubai sees brisk handovers of newly completed residential buildings across locations.

From the tenant’s perspective, renewal still makes for better savings in most cases, while on a new lease, these tenants are possibly looking at spending anywhere between 10%-30% higher, according to some estimates based on where the relocation is happening.

“The only place where new rent leases actually overtook renewals is in Business Bay during June,” according to data from GCP Properties. “In communities such as Arjan, renewals continue to score over new leases by some distance.”  

In Arjan, studios are averaging around the Dh50,000 mark, while 1-bedroom units are listing for Dh72,000 and thereabouts. The community, one of the most popular mid/upper-mid market locations alongside Jumeirah Village Circle, has been through a series of rental increases. But that rental growth is start to slow down.

The same trends are visible in other popular residential locations across the city. And directly explains why existing tenants feel they are better off renewing rather than seek new premises.

Studios for around Dh80,000-Dh85,000. One-bedroom apartments from Dh120,000.

Studios are available in a sizable range, from Dh60,000. One-bedroom units command Dh100,000, though there are some listings coming just under.

What’s happening is also the impact of Dubai’s ‘smart’ Rental Index, which went live in early January. So, there was the initial rise in rents during renewals happening in the first 3-4 months after the new Index went live. Once that rush of rent ‘leveling off’ was done with across communities, the current increases are happening at the individual property or building level.

“Where they can, landlords are still asking for a 15% rise – if the Dubai smart Rental Index allows it,” said a property source. “But the vast majority of renewals are happening in the 5%-10% range.

“Most tenants are comfortable with that, which explains the higher renewals.”