Rental Costs in Dubai Surge and Outstrip increases in Expat Wages
Over the last decade lucrative employment opportunities and the draw of a distinctive culture have led to Dubai becoming one of the most popular expat locations.
In fact, a considerable proportion of Dubai’s population are foreign. While many expats find their time in the region enjoyable and rewarding, others are struggling with one issue in particular.
Rent increases are becoming a major problem among Dubai’s foreign workers as they attempt to battle a rebounding property market and demanding landlords.
According to a report compiled by Jones Lang LaSalle Inc. last month the rental cost of a regular one-family home increased by 14 per cent while the rent for apartments increased 15 per cent.
During the same period, average wages in the area only increased by 5.6 per cent.
In the words of economist Farouk Saussa; ‘Dubai should be worried about rising rents because there is no upside to the government or society. It goes against Dubai’s best economic interest because it erodes its competitiveness.’
Rent began to climb in 2012 as demand outweighed supply in Dubai’s most desirable developments, and rent increases spread outward.
Furthermore, last month the United Arab Emirates central bank opted to place restrictions on mortgages for foreign buyers, meaning that renting is the only feasible option for many long term expats.
As a Middle East researcher with Jones Lang commented; ‘Making it more difficult to buy will force more people to stay in the rental market. Rents are going up a bit more than prices at the moment, which makes properties that are completed and rented more attractive investments.’
It is expected that while the rate of increases will slow, rental costs will keep climbing for the foreseeable future.
The number of rent-based conflicts between landlords and tenants are also rising as families are forced to move on a semi-regular basis in order to keep up with what they deem to be the ‘unreasonable’ demands of their landlords.
As it stands, if property owners intend to hike the rent they must inform tenants of their plan at least three months before their contract expires.
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If you’re immigrating to the United Arab Emirates comprehensive information can be found in our country guide.