How tenants use Rera index to beat Dubai rents

Residents of Dubai are increasingly opting to stay put with their existing leases rather than face mounting rents and relocation costs associated with moving to a new residence in the emirate.

According to real estate consultancy Asteco, most rental transactions in the emirate during the second quarter of 2014 came from newcomers to the city and were not a result of internal relocations.

This is in stark contrast to a few years ago when, in the era of falling rentals, a majority of residents chose to relocate to different areas within Dubai with the aim to either save on rentals or upgrade their quarters while maintaining the level of rental outgo

“Indeed, with rents increasing steadily since 2013, tenants have elected to remain where they are, and paying the rent increase, as indicated by the Rera rental index, rather than moving as this leads to additional costs such as moving costs, agent’s commission, etc.,” Asteco says in its H1 report on the Dubai property market.

However, the agency does maintain that rent hikes in Dubai have slowed down considerably, similar to the sales market, as leasing activity remained relatively stable in Q2 2014. The agency says that rents witnessed modest growth of between 0 to 10 per cent across Dubai.

Among areas that witnessed no increase or less than 5 per cent quarter-on-quarter growth in apartment rentals during the second quarter of 2014 are Deira and Sheikh Zayed Road (0 per cent increase), International City (1 per cent), Discovery Gardens (3 per cent), and Downtown Dubai and Jumeirah Lakes Towers (4 per cent each).

Three areas saw q-on-q rental growth of 6 per cent during Q2: Dubai Marina, Jumeirah Village and Palm Jumeirah. Only one area – Jumeirah Beach Residence – saw double-digit growth (10 per cent) in apartment rentals during the second quarter of this year, Asteco data shows.

“Jumeirah Beach Residences witnessed the highest growth of 10 per cent in Q2 as new stock was handed over in Al Bateen Residences, the first tower in Dubai Marina with a direct beach access,” the report explained.

In terms of villas too, a number of areas seem to be peaking when it comes to growth in rentals. These include Mirdif and Palm Jumeirah, both of which did not see any rise in rentals during the previous quarter.

In addition, Jumeirah Islands and Green Community villa rentals saw only a marginal 1 per cent growth in Q2, followed by a 4 per cent rental growth in three Dubai communities: Al Furjan, Arabian Ranches and the Meadows.

The Springs community saw a healthy 9 per cent quarterly increase in rentals during the second quarter of 2014, while Jumeirah Village saw rentals surge by 11 per cent during the quarter. “Jumeirah Village witnessed an 11 per cent increase in rental rates in Q2 due to the villas being amongst the most affordable in Dubai. A 3-bedroom townhouse would typically achieve rates from Dh155,000 to Dh185,000 per annum,” it explained.

The best performer, however, were villas in Jumeirah, where rentals surged by 12 per cent during the previous quarter. “Villa rental rates grew by 5 per cent, on average, in Q2 with the popular Jumeirah location witnessing the highest growth of 12 per cent,” said the report.

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