Dubai has bounced back stronger than ever in 2013. Renewed confidence in the city has seen a slew of long-forgotten projects restarted and new ones launched, along with a positive outlook for employment among the city’s now more than two million residents. While that’s all very good news for the most part, one of the side effects it’s had on those who rent – an estimated 70 percent of the whole population – is not so welcome. In the past six months alone, prices have risen 13 percent, and some industry insiders expect prices to climb by another ten percent by the end of the year.
As prices continue to rise and landlords rush to cash in on increased demand, the city’s huge number of tenants face a growing number of concerns. Here, experts answer some of the biggest questions on the lips of Dubai’s lease-holders.
According to Mark Wellman-Riggs, general manager at Crompton Partners Real Estate Agents, a swelling population and increased demand in already sought-after areas has seen prices begin to rise. Now, tenants who can’t find property in ‘key areas’ (such as Dubai Marina and Downtown Dubai) or find themselves priced out of such locations are turning to better value developments – such as The Greens and Jumeirah Village Triangle – in turn causing prices to surge there, too.
Mat Green, head of research and consultancy UAE at CBRE Middle East, notes that property owners across the city have been quick to cash in on demand. ‘Over the past 12 months, landlords have become increasingly bullish, leading to an increasing number of rental disputes being raised at the Rent Committee,’ he says, with CBRE also seeing a trend in some residents downsizing or relocating to more affordable communities.
Riggs echoes this sentiment, explaining that in some cases, Dubai’s residents are being priced out of the market altogether. ‘Some are changing area, others are simply downsizing. Others have headed further out to Sharjah and Ras Al Khaimah to commute,’ he says. ‘There is also a growing trend of tenants looking into buying options – and many are taking the view that ownership may be cheaper in the long run.’
Could Dubai really shift from a city of renters to buyers? According to data from the Dubai Land Department, covering real- estate transactions in the emirate, there’s been a significant rise in the number of mortgages taken out this year, with many agents speculating that though rentals may be overpriced, sale are underpriced. In a city where landlords are once again demanding one cheque for a year’s rent, the difference between that sum and the deposit for a mortgage on something only a little smaller is worth considering.