Spiralling rents have triggered a migration of tenants from some of Dubai's most popular housing developments as double-digit inflation returns to the property market.
Rising property rents lead to exodus from prime Dubai areas
Spiralling rents have triggered an exodus of tenants from some of Dubai's most popular housing developments as double-digit inflation returns to the property market.
In a dramatic reversal of fortune, many renters who upgraded to larger homes in more desirable developments after the 2008 financial crisis are now moving the other way, brokers say.
Tenants moving from prime locations such as Emirates Living, The Palm and Arabian Ranches now account for about a quarter of the lettings business of some brokers in the city. Cluttons, for one, reports that such business has risen from about 15 per cent six months ago to 25 per cent today.
"We are definitely seeing a movement from some tenants based in the Springs, the Lakes and the Meadows or on the Palm who have had the talk with their landlord and thought actually we can't afford to pay another Dh20,000 or whatever," said Mario Volpi, sales and leasing manager at Cluttons' Dubai office.
The recent rapid recovery in Dubai's property market has taken many residents by surprise after enjoying nearly four years of falling or static rents in most locations throughout the city.
Population growth and demand for housing from big local employers such as Emirates Airline are rapidly eating into the available stock of villas and apartments that many analysts had expected would keep rents in check for years to come.
Mr Volpi said that tenants who previously rented villas in these established areas were now moving to Jumeirah Village Triangle or Jumeirah Village Circle and other locations. Similarly some residents of Dubai Marina were looking to cheaper apartments across Sheikh Zayed Road in Jumeirah Lakes Towers.
"It often depends on what the landlord can get away with.
"I would always advise tenants to stand firm and check how much Rera [Real Estate Regulatory Agency] calculates the rental increase should be," he said.
Dubai estate agent Asteco estimates that annual rents for a three-bedroom villas in the Springs rose to Dh140,000 at the end of 2012 - a 27 per cent increase year on year. And rents for similar sized villas in Arabian Ranches increased 25 per cent to Dh155,000. Further increases are expected for the current quarter.
"My own landlord recently put my rent up and I had to negotiate hard with him," said Matthew Green, head of research UAE for the property consultancy CBRE. "Eventually I met him halfway so we both got something out of it. We are starting to see a downwards move to more affordable places, and I think it is a trend we will see more and more of this year."
It is not just estate agents benefiting from the trend. Downsizing is also providing a lucrative line of business for the emirate's removal companies.
"This has been our busiest February for the past four years," says Chris Humphrey, founder of removals and storage company Easytruck. "We're getting four or five jobs a day. In 2009 and 2010 when everything hit the fan here, people were upgrading to better locations for cheaper rent. Now we're starting to see people going the other way so we're getting a lot of enquiries from the Marina and the Palm at the moment."