The Big Debate: Renting vs. Buying - How to Escape the Rent Trap
On this week's episode of Taking Care of Business, we dive into the Dubai rental market with Lettings Director Josh Buckle and Paul Kelly, Operations Director. They discuss the 2024 rental transaction data, rental price hikes, and market behavior. Learn how the new AI-powered rental index will offer tips for both tenants and landlords to navigate the evolving market and find out which areas are hot for investment and what to expect in the Dubai rental market moving forward.
The Dubai rental market boom
The discussion kicks off with an analysis of 2024's market performance, with Paul highlighting the significant 17% surge in total transaction value, reaching a staggering 44 billion dirhams. However, this is contrasted with the mere 2% increase in new rental contracts, indicating a substantial average rent increase of 20% across Dubai.
Josh explains in more depth that the price escalation is partly due to the high renewal rate (61%), with tenants opting to stay put in a competitive market. This, however, creates a "catch 22" for those saving for a down payment, as rising rents eat into their savings. Paul and Josh also discuss the emerging trend of newcomers to Dubai immediately purchasing property, rather than waiting, further fueling demand.
The smart index impact
The conversation then shifts to the recently introduced AI-powered smart rental index, which provides more granular valuations at the building level. Josh believes this will enhance market transparency but may also lead to some landlords re-evaluating their property's worth. Paul mentions that the index will also be able to support both landlords and tenants with credit checks!
What will 2025 bring for the rental market?
Looking ahead to 2025, Josh discusses in depth the continued price growth in both the rental and sales markets. Josh and Paul dive into the significant number of new units entering the market, particularly townhouses, with Josh remaining uncertain whether this will curb the upward price trend.
Advice for both landlords and tenants
For landlords, Josh offers three key tips to stay competitive: ensure properties are well-maintained, price them correctly from the outset, and work with a trusted agency. Josh explains why overpricing properties can leave them vacant for too long and risking it becoming stigmatised. For tenants, Josh recommends flexibility, proactive engagement with area specialists to access pre-market listings, and considering larger upfront payments (fewer checks) to strengthen their position.
Keeping up in a competitive market
Paul and Josh go on to discuss the evolving demands of tenants, with newer communities offering a wider array of lifestyle amenities. This could potentially impact the appeal of older communities. The podcast concludes by emphasising the dynamic nature of Dubai's rental market, urging both landlords and tenants to stay informed and adapt their strategies accordingly. Paul urges everyone to utilise available resources, such as data platforms including the Allsopp & Allsopp Data Hub and area specialists to be able to stay one step ahead!
Want to continue learning about the Dubai rental market, watched the full episode now!