Is the rent increase in Dubai real?

Rents are going up in Dubai or so many say and many others are made to believe. Media observers and real estate agents comment that rents are likely to go up further by the end of the year. A number of real estate companies released reports that claim from 10% to 25% rent increase in the primary residential areas of the city.

But what is the actual situation? Are the rent hikes for real or a speculative strategy of landlords and real estate agents aiming at stimulating profits?

Combing the listings on Dubizzle, which become the first spot for property search in Dubai, we see at first glance that the number of listings for residential properties for rent increased by more than 2,500 during the past two months. As of today, 39,910 residential units are available and can be rented in Dubai, while in May the number was slightly above 37,000.

With more available residential units, one may naturally expect that the rental values will slide. Increasing availability usually suppresses demand, but not vise verse.

However, a number of Dubai-based web sites with a large number of readers claim that rents are increasing steadily, in particular within the well-established areas of the city. Some say in the Old Town Dubai rents went up 10%, while others claim 25% increase for Palm Jumeirah residential properties.

What the listings on Dubizzle say?

Check the rents in the Old Town! Plenty of listings for all types of apartments suggest that the availability is plenty. On the second look, one can see that while many properties are listed with exactly the same rent tag as a year ago, there are others that are listed with 10% or even 20% higher rents. Very few listings are even more ambitious showing numbers between 30% to 40% higher.

If you are long-time resident of Dubai, you would quickly get the picture right! Rents have not increased yet, but some landlords are trying to get a better return on their investment. If you are a new-comer, you may decide that the lowest available rent is a bargain and jump on it without further comparison. Here is some more precise information about the current rents in the Old Town:

• 1 Bedroom apartment can be found for AED 80,000
• 1 Bedroom with study can be found for AED 90,000
• 2 Bedroom apartment can be found for AED120,000
• 2 Bedroom with study can be found for AED130,000

These were the average rents for the same types of properties in the same location back in the summer of 2011. In addition, the above mentioned rental values are what we can see on the Interent, without and discounts, which the majority of landlords in Dubai are pricing-in.

In the same time, one can find also listings for 1 Bedroom apartments asking for AED110,000 and 1 Bedroom plus study for AED115,000. Of course, everyone who owns an apartment is free to ask for rent that justifies his investments according to his understanding. From another point of views, real estate agents always try to hold to a good rental values, because they are making their money from commissions.

However, with such tremendous availability of properties for rent and for sale in Dubai, the tenant or the buyer  still has the upper hand in dealings.

Our advice is: Negotiate the best value for your hard earned cash!