Re-emerging real estate market: facing an increase in rents? UAE tenants can have the upper hand in rental contract negotiations


Resurging real estate market: UAE-based tenants gain the upper hand in lease negotiations, surveys show
Image Credit: Shutterstock

Dubai: With UAE property showing signs of recovery and rents may increase in some areas as a result, it would be helpful if a largely tenant-driven property market understood how to negotiate a possible reduction.

Additionally, recent surveys indicate that UAE-based tenants have gained the upper hand in lease negotiations. But how should tenants go about looking for possible reductions in current rental rates?

“Occupants have greater bargaining power and greater flexibility in negotiating with landlords,” a new study from Dubai-based property consultant CBRE found.

“The most frequently seen incentives include rent reductions and the possibility of rent payments in multiple checks. “

Occupiers have greater bargaining power

The UAE real estate market, which is currently seeing increased investor interest, is now “increasingly a tenant-driven market,” added CBRE.

Today’s market is more tenant-driven, as landlords use incentives like multiple check payments, no commissions, or the inclusion of utility charges to retain and attract tenants.

However, in hindsight, Dubai residents who have stayed for a long time over the past decade or more will have experienced both extremes of the rental market cycle.

Stock rental contract

How Dubai rental rates have evolved over the past decade

How Dubai rental rates have evolved over the past decade

Like any market, Dubai’s real estate industry has seen its ups and downs amid global economic fluctuations since 2008. As a result, long-term tenants may have found that they were paying almost half of the annual rent at one time. given compared to previous years.

Rental rates in 2008 were much higher than today with a growing workforce and economy. However, the global financial crisis caused rents to plummet in 2009, and they remained subdued until 2012, as the recovery began.

In the Dubai Marina, for example, the average cost of a one-bedroom apartment in 2008 was 130,000 Dh, before dropping to 63,000 Dh in 2011. by the end of 2019 and 2020 had dropped to an average of Dh58. 000.

Rents and asking prices have fallen in the UAE

Rents for residential properties and apartments have steadily declined in Dubai, with villa rents falling by 2% and apartment rents by 10% in the first quarter, compared to the same period last year.

However, asking prices have fluctuated by location or community, with rental rates showing single-digit drops to double-digit increases, data from Dubai-based real estate software company Property Monitor showed.

Discovery Gardens saw rent cuts of 22% in the 12 months ending in March and listings show one-bedroom apartments at just Dh30,000, with some landlords allowing one or two month stays without rent.

Even slightly more upscale environments – such as JLT and Dubai Marina – saw a 16% drop during that time, according to Core, the real estate consultancy. This has created opportunities for tenants to get a room in a slightly upscale Dubai Marina tower block for around Dh55,000 to Dh60,000, while a JLT unit would cost less than Dh50,000.


Lower rents in Sharjah, Ajman, Ras Al Khaimah

Lower rents in Sharjah, Ajman, Ras Al Khaimah

Rentals in Sharjah in the residential space are down 13% from a year ago, while rentals in Ajman are down around 10%. Ras Al Khaimah posted the smallest year-over-year decline of 4%, according to an update from Asteco, the real estate services company.

These figures suggest that the UAE rental market appears close to stability after three to four years of decline. The same is happening in Dubai, where in fact some locations are seeing rental gains in recent weeks.

At the Palm or the Downtown, rents increased by 4 to 5% between the fourth quarter of 2020 and the first quarter of this year.

Tracking rent indices is essential for negotiating lower rents

When potentially modifying a rental agreement, you are asked to communicate the changes to the landlord at least 90 days before the contract expires, but if you missed this window you will not be able to change its content at all. . If you still have time, however, the key is preparation.

The Rent Index, maintained and updated periodically by the Real Estate Regulatory Authority (RERA) of the Dubai Land Department, shows the average rents for all communities in Dubai.

It also tells you if your landlord has the right to increase your rent and, if so, by how much, in terms of a maximum percentage. So if you are seeing a drop in average rents in your community, it would be best to have the latest official figures ready before talking to your landlord.

However, experts have noted that the RERA rental calculator doesn’t really help you when the rental market is soft. This is because the calculator is only updated once a year and therefore is not as accurate as it should be for discounted rental price renegotiations.

Rental contract 20200727

Image Credit: Shutterstock

How else can I research the rental prices and renegotiate?

Price research can also be done by visiting real estate portals such as and and filtering your search to specify the tower and type of unit you live in, which will give you quite a range. precise of what is available on the open market.

These websites also give current trends and reports regarding the prices of properties for sale or rent in their blogs. You can find them at the top or bottom of the home pages.

From that point on, you will be able to offer a reasonable rent to reflect current prices. You can arm yourself with additional facts and figures on newspaper websites, which usually report house price trends on a regular basis.

How tracking portals helped a Dubai resident negotiate a rent

Hannah, an expat who is currently renting a two-bedroom apartment in Dubai Marina, shares her recent experience: “I was paying an annual rent of Dh 150,000 for my apartment, which seemed fair until last year when the index of rents showed average rents between 140,000 and 180,000 Dh for two-bedroom apartments in Dubai Marina.

“And the most recently updated index showed a drop in average rents for the same real estate segment to 120,000-160,000 Dh. This information helped me negotiate with my landlord, who has just agreed to lower the rent to 140,000 Dh. “

Dubai skyline property stock

The appetite for buying homes is also boosting the real estate market

The appetite for buying homes is also boosting the real estate market

In the first quarter of the year, the supply of apartments in Dubai stood at 1,925 units, with deliveries to communities such as Dubai Hills Estate and Dubai Creek Harbor. Other units are also expected to enter the market over the next few months and developers have resumed launching new projects. In Abu Dhabi, around 1,700 apartments and 50 villas were delivered during the same period. Another 11,600 residential units are expected before the end of the year.

The UAE has seen an increase in homeownership demand, with sales transactions reaching record levels in recent months. Last April, more than 4,800 properties in Dubai, with a combined value of Dh10.97 billion, changed hands. The value of sales was the highest recorded in Dubai since March 2017.

UK data analytics and consultancy firm GlobalData noted that the clearest sign to date of the market resurgence came when UAE-based real estate developers Nakheel, Emaar and Meydan anticipate the announcement. new projects and a renewed interest in the purchase of housing has followed. GlobalData added that plans are also being considered for projects in newer areas of the emirate: areas such as the Dubai waterfront and the Palm Jebel Ali area on the coast near the Abu Dhabi border. .

Despite renewed interest from homebuyers and demand for housing, developers are also softening their offerings, offering option-to-buy rental programs, fee waivers and post-delivery payment plans. attractive to attract investors.


About Tammy N. McFarlane

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