According to real estate industry executives, UAE residents who will be renting for the first time are expected to pay more for smaller rooms due to an increase in rentals and a lack of villas.
Since the pandemic caused movement restrictions, there has been an increase in demand for larger flats and villas. Even if there are fewer cases of Covid today and precautions have been lifted, demand is still rising. Due to the new reality of paying more for less, this meant that new tenants entering the market would have to adapt.
“With rental prices on the increase daily, new tenants that enter the market must understand they are likely to get less with their money than those who are already in the market and have a bigger unit. Although rent rising is inevitable, those with bigger units are likely to hold onto these… therefore, there are more readily available smaller units,” said Morgan Owen, managing director, Provident Real Estate.
New purchasers are switching to apartment living, according to Ali Rao, group CEO of Kingsley Properties, because annual rentals make relocating easier for them.
Because they now realize that the adjustments they made during Covid-19 are “perhaps more sustainable and cost-effective,” he claimed that many residents still lived in smaller apartments.
The lack of villas and townhouses, according to Ayman Youssef, vice-president of Coldwell Banker, UAE, continues to drive prices higher in the segment.
“Though this trend is not as aggressive in apartments, we are witnessing a steady increase in demand for luxury-serviced residences and sea-facing apartments. The affordable property segment, on the other hand, has witnessed a moderate price increase,” he said.
Landlords moving to holiday homes
Owen continued to discuss the latest developments in the resident market by revealing that landlords are also embracing the “holiday home concept” since it offers them higher returns and more freedom.
“Additionally, landlords are starting to see the value of property management and having a team or individual to manage the property from start to finish, making it both easier for landlord and tenant,” he said.
According to Rao, there is also obvious excitement among investors who now view vacation homes as a wonderful model for increasing rental income.
According to Shilpa Mahtani, COO and co-founder of bnbme Holiday Homes by Hoteliers, a holiday home owner can make between 10% and 50% more than someone who rents out their property on a long-term basis.
“The biggest advantage is that once they start renting out their houses, homeowners can earn 25 percent more year on year, aided by positive reviews and our marketing,” she said.