The number of UAE residents who rent property is significantly higher than those who own homes in the country, according to a nationwide survey by propertyfinder.ae.
The survey found that 72 per cent of respondents rented property, while 28 per cent were homeowners.
A large expatriate population and rising property prices have boosted renting, said Renan M. Bourdeau, deputy CEO of propertyfinder.ae.
“Home price increases over 2013 have made buying significantly more expensive, tipping the math in favour of renting. Additionally, tighter credit standards for mortgages, capping of the loan-to-value limit at 75 per cent and doubling of property registration fees mean that unless you have enough to put a healthy deposit down to secure a mortgage, you will need to stick with renting.
“It’s no surprise then that would-be buyers feel priced out of the housing market,” he said.
According to Bourdeau, the rental market has also benefited from increased regulations.
“RERA has induced greater stability into rental contracts than what was seen up until a couple of years ago, passing regulations on rent rises and the length of a tenancy,” he said.
“However, we see landlords getting round these laws by telling tenants that they plan to move into or sell the property in order to put it back on the market for a higher price. So clearly, these laws and rising rents are not driving people to rent in the way we would like,” he added.
Apartment rents surged by 50 per cent while villa rental rates grew 20 per cent in 2013, a recent report by Asteco found.
The report attributed the spike in rents to continued unrest in the wider Arab region, Dubai’s successful Expo 2020 bid and an expanding economy.
While property prices are also soaring – Asteco stated that residential prices were up 60 per cent in 2013 – the supply of affordable housing into the market might persuade more renters to become buyers, Bourdeau stated.
“Affordable stock coming up in communities such as Dubailand, Dubai Sports City and Jumeirah Village Circle is opening up the market to a wider investor segment.
“This is likely to encourage more people to buy and gradually shift the trend away from renting,” he added.