With the United Arab Emirates growing in importance on the world economic, political and cultural stage, it is unsurprising than more and more people are coming to the Emirates for short or even long term stays. This is especially true of the Emirates’ largest city, Dubai, where millions of people from across the come annual, some staying long enough that housing becomes a genuine concern. However, with growth of the city slowed by limited water supplies, housing is not the easiest thing to acquire in Dubai, and in some neighborhoods of the city, rents even on one bedroom apartments have almost doubled in the past four years.
Rents in Bur & Deira to rise further
Inside of the Bur Dubai neighborhood, rents of one bedroom apartments increased by 70 percent from their cost at the end of 2011, from a cost of Dh43,000 per year to Dh73,000 per year. Meanwhile, in the Deira neighborhood, rental rates on one bedroom apartments have increased by 86 percent from a record low 2012 cost of Dh35,000 per year to a 2015 rate of Dh65,000 per year. This is, however, still less than the record high rates of 2008, when rents of one bedroom apartments in Bur Dubai cost around Dh105,000 per year and Deira’s average one bedroom apartment costs were Dh88,000 a year. In 2009, there was a steep drop in rent rates in both neighborhoods; 59 percent in Bur Dubai (with an average rate of Dh43,000 per year) and 45 percent in Deira (with an average costs of Dh48,000 a year). To try and attract more renters despite the fact that rates are going up, landlords in the Bur Dubai, Deira and Karama neighborhoods have begun to offer free services, such as zero commissions, allowing the sharing of apartments and multiple check payments.
The future of rental rates in these neighborhoods is unclear. According to Asteco, a real estate firm based in Dubai, rates of residential apartment rentals in Dubai will go down if all the planned new housing units inside the city are finished on time. Over 22 thousand apartments are slated to be finished in 2016, along with 7,700 villas, up from the 13,500 apartments and 800 villas that were finished in 2015 to meet the growing demand for housing in the city of Dubai. While JLL, a real estate consultation firm, likewise expects rent rates to drop in the short term, they also warn of an increasing rent cost in the very near future, maybe even as soon as 2017. This is particularly true if Dubai continues to attract residents while new housing construction projects are not built fast enough. If the 22 thousand apartments are not finished by the end of 2016, there will almost assuredly be an increase in one bedroom apartment unit rent rates. If the housing projects are finished by the end of 2016, rates are anticipated to lower, however, much to the relief of many residents of Dubai. While the projected time frame is still officially on schedule, there remains much uncertainty as to whether or not the situation will improve.