An Erratic Market in Dubai
Like many locations throughout the world, the rental market in Dubai has been chaotic since the start of the pandemic. Dubai’s population is almost 90% expatriates, and both international departures and the suspension of new arrivals in 2020 caused lower demand for housing. Rents for smaller apartments dropped while demand increased for larger spaces, especially villas, as workers remaining in the emirate decided to upgrade their work-from-home spaces. Some of this upsizing was possible due to a brief period of uncertainty and reduced rents which landlords now want to reverse.
A Fragmented Market
AIRINC’s February 2021 survey found a fragmented rental market in the wake of all this intra-city movement and the reopening of the international border. Apartment rents remained stable in the most popular areas close to the sea, while demand for villas surged and pushed rents up. Elsewhere in the city, rents were still falling for smaller and older apartments. Expatriates arriving in the spring are now finding slim inventory for villas and a quickly moving rental market. A long-time AIRINC housing source in Dubai recently confirmed that the market for villas is erratic and difficult to predict.
Rental Increases?
Assignees who remained in Dubai through the pandemic may also find that landlords are requesting large increases during renewal. Among other changes, a rental law is being drafted which would freeze rent for three years. The law has not been implemented yet, but it is possible that landlords are trying to increase rents ahead of the new regulation. Tenants in this case can check the Land Department’s rent index to see if the increase is reasonable for their neighborhood. News reports confirm that, if the rental market continues to recover, we may see the first large-scale rent increases in Dubai in over five years. AIRINC is following the situation closely and will conduct another survey in August.
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