The gap between asking and bid rates for rentals has been widening in Dubai as growing demand and tight supply are encouraging landlords to demand higher rates.

Real estate industry executives say that the gap between sale prices of rented and empty units are reaching up to 50 per cent in some areas of the emirate.

Property prices and rents have been consistently rising in most of the prominent areas of Dubai due to local population growth outpacing the supply of residential units, surpassing their previous peaks witnessed in 2014. Some residents believe that landlords are exorbitantly charging rents for their properties and become “greedy”, knowing that their vacant properties will be filled up quickly by new entrants.

According to the latest data, Dubai’s population grew by nearly 25,700 in the first quarter of this year. But only 8,350 units were delivered during the January-March period, hence, demand is outpacing supply and making Dubai a landlord market in terms of rentals perspective.

Sachin Kumar Singh, business head and managing partner at Foremen Fiefdom, said the emirate’s booming rental market is experiencing a growing disparity between asking rent and renter offers.

“This trend is fuelled by tight inventory and high demand, with the gap between sale prices of rented and empty units reaching up to 50 per cent in some communities, depending on location and view. This widening chasm between rents for occupied and vacant properties signifies a significant shift from historical trends. Following the 2008 housing crisis, rents for occupied units were typically lower than vacant ones. The current situation highlights the delicate balance required in rent stabilisation regulations,” Singh said.

He added that while overly strict regulations can disincentivize property upkeep, lax controls can lead to uncontrolled rent hikes, pushing affordability to the limit. Therefore, finding a balanced approach will be key to ensuring a healthy and sustainable rental market in Dubai.

Usama Sukhera, leasing team leader at Huspy, also echoed his peers, saying the gap between asking and bidding is widening in the rental segment.

“From January 2023 to January 2024, there has been a seven times increase in the asking and bid gap. This year the gap isn’t growing with the same intensity and with the measures the Dubai Land Department is taking, along with the revision of the Real Estate Regulatory Authority (Rera) calculator, I feel that it should be more stable,” he said.

Prathyusha Gurrapu, director and head of research and consultancy at Cushman and Wakefield Core, said the Rera calculator, which was recalibrated on March 1, 2024, to be better aligned with open-market pricing, is expected to help reduce the disparity between renewals and new rents.

“The calibration of the calculator is expected to result in a sharp slowdown in disputes over rental increases. Moreover, from April 1, 2024, Dubai landlords can seek rent re-valuation only with a legal order. Landlords in Dubai can still apply for a rent re-valuation with Rera if they believe they are entitled to a higher asking rent than the one suggested by the updated Rental Index,” she said.

Jacob Bramley, senior leasing manager at Betterhomes, said owners often aim to price their properties aggressively due to high market confidence. “With recent increases, owners may have more margin since they accepted lower prices in previous years. However, we often achieve asking prices or close to them on many listings if owners are willing to accept a vacant period to meet their desired price."

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