Dubai’s real estate market is witnessing a shift in tenant preferences as rents continue to soar to record highs. Industry executives have noted that young professionals and smaller families are opting for smaller houses within the city, driving the demand for such units. Landlords are also increasingly offering smaller properties as they are more affordable, easier to rent out, and provide better returns on investment. On the other hand, residents seeking larger units are moving to the outskirts where prices are somewhat more affordable.
The size of new property units in Dubai has decreased by approximately 12.5% compared to older properties, despite substantial price increases post-pandemic. Rising plot prices have also pushed developers to introduce smaller units to maintain high margins. Property prices and rents have been steadily increasing after the pandemic, surpassing their 2014 peaks. Rent hikes are forcing tenants to consider smaller units due to lower costs, leading to increased demand for such properties, especially among price-sensitive tenants.
As tenants face affordability challenges, there is a growing need to re-evaluate rent stabilization mechanisms. Property consultants are increasingly playing a vital role in facilitating negotiations between tenants and landlords to reach mutually agreeable solutions. Tenants are seeking the assistance of reputable consultants to guide them through the rental process, find affordable housing options, and negotiate better terms. Landlords are opting for property management services to handle negotiations professionally, ensuring fair rent increases and legal compliance.
Tenants are also requesting flexible payment options, such as spreading rent payments over multiple months. The ‘Rent Now, Pay Later’ option, where a third-party platform offers rent advances, is gaining traction among tenants. The trend of downsizing to smaller units is not only driven by affordability but also by the availability of relatively lower-priced new handovers, providing many options for first-time buyers to purchase smaller units and become homeowners. Property consultants are vital in ensuring a transparent and fair rental process by conducting thorough due diligence and verifying legal documentation.
Overall, the real estate market in Dubai is witnessing a shift towards smaller properties to cater to the evolving tenant preferences and rising demand for affordable housing options. The role of property consultants in facilitating negotiations and ensuring transparency in the rental process is becoming increasingly important. As the market continues to evolve, both landlords and tenants are exploring new strategies to navigate the challenges posed by soaring rents and property prices in Dubai.
