Around 65 per cent of Dubai residents said that they plan to relocate to a new home upon their next lease renewal owing to large rental hikes, a new survey has found.
According to a poll by price comparison site MoveSouq.com, which surveyed 300 Dubai residents on their rent costs, around 84 per cent of the respondents saw a rent increase in 2014.
Out of that, 36 per cent of them saw a rent increase ranging from one to 10 per cent while 48 per cent of the residents said that they faced a hike of more than 10 per cent.
The poll also noted that 75 per cent of those who faced a rental hike of more than 10 per cent were planning to move.
“The latest results of our survey are reflective of the overall price increases that Dubai residents faced during late 2013 and early 2014,” said Bana Shomali, CEO, MoveSouq.com.
“It would be interesting to see how these trends change over time given the current stabilisation in housing prices.”
Dubai’s rental market, which was overheating due to a strong recovery in the residential sales market, has now shown signs of a slow down.
According to a recent report by real estate consultancy Asteco, average apartment and villa rental rates dropped quarter-to-quarter by two and three per cent respectively during the third quarter of 2014.
However, year-on-year rental growth remained high, with most areas in the emirate posting double-digit growth.
While localities such as Palm Jumeirah and Sheikh Zayed Road saw average apartment rates rise by 21 per cent in Q3 2014 compared to Q3 2013, the rise was higher in Jumeirah Lakes Towers (42 per cent) and Dubai Marina (36 per cent).
Affordable communities such as Discovery Gardens and International City saw year-on-year rates surge by 23 per cent and 40 per cent respectively.
Asteco forecast that many tenants are still likely to see a rental increase as per the RERA rent index, leading them to relocate to other affordable emirates.
Meanwhile, another report by research firm Colliers International noted that Dubai had a severe shortage of affordable housing.
Colliers found that around 50 per cent of the households in Dubai earn between Dhs9,000 to Dhs15,000 per month and can only afford rents ranging from Dhs32,500 to Dhs54,000 per annum. This has put the majority of the housing units in the market out of reach for many residents, the report said.