Question: I’ve lived in Dubai for 10 years but my rent in Jumeirah Village Circle in recent years has gone up quite a lot. In fact, this year alone, it has increased by nearly 25 per cent.
Friends in other areas are reporting similar situations, so some are moving further out or even relocating to other emirates altogether. Is this sustainable? Are tenants being priced out of Dubai? GC, Dubai
Answer: It’s true that Dubai’s rental market has seen one of the strongest growth phases in its history, especially in recent years. This surge is down to rapid population growth, the influx of skilled professionals and entrepreneurs and limited supply in popular communities.
However, saying tenants are being “priced out” isn’t entirely accurate. Rather, we’re seeing a redistribution of demand. In the past, areas such as JVC, Discovery Gardens, Dubai South and Mirdif have benefitted from those seeking value, while rents in prime areas like Downtown, Dubai Marina and Business Bay have begun to stabilise after sharp rises between 2021 and 2024.
The Dubai Land Department’s Smart Rental Index still serves as a control mechanism, but it’s important to note that the index, while up to date in terms of live data, measures Ejari renewals rather than available rental pricing in the open market.
When renewal rents exceed what’s permissible, tenants have every right to file a complaint with the Rental Dispute Settlement Centre.
For those on tighter budgets, the strategy is not necessarily to leave Dubai but to adapt, consider smaller units, newer fringe communities or shared housing. Developers are also responding with more mid-market housing stock to rebalance affordability.
So, while the current cycle may feel unsustainable, Dubai’s rental market has always been cyclical. Expect rents to stabilise by next year as new supply from large-scale master communities begins to hit the market.
Q: I’m looking at buying in a newly developed community but the service charges there seem quite high compared to older areas. Are high service charges a bad sign and how do they impact my investment? JC, Abu Dhabi
A: Service charges are one of the most overlooked aspects of buying property in Dubai, but they are critical to understanding the true cost of ownership.
First, to clarify: service charges are annual fees paid by owners to cover maintenance of common areas, security, landscaping, facilities and sometimes even chiller charges. They are usually calculated on a per square foot basis.
High service charges are not automatically negative. They usually reflect the level of amenities and upkeep in the building or community. For example, a luxury development on the Palm Jumeirah with concierge, valet, multiple pools, gyms and landscaped gardens will naturally have higher service charges than a mid-range tower in Sports City.
Well-maintained buildings with high charges often hold their value better and attract quality tenants willing to pay higher rents. The danger lies in paying high service charges for a poorly maintained building. This is why due diligence is essential. Always request the latest service charge statement and if possible, speak to current residents about the quality of management.
From an investment perspective, service charges directly impact your net rental yield. For example, two properties may have identical gross rental income, but the one with higher service charges will give you a lower net yield. That said, some investors accept lower yields in prime locations because they are banking on strong capital appreciation.
In short, don’t just look at the number. Look at what you’re getting in return. High service charges are acceptable if the amenities, maintenance and tenant demand justify them.
Q: Several developers in Dubai, such as Damac, Omniyat and Danube, and other emirates are launching office towers. Why is there a sudden focus on commercial real estate? FJ, Abu Dhabi
A: This is one of the most interesting shifts we’ve seen in the market recently. After nearly a decade of residential dominance, developers are rediscovering the potential of Grade A office space. The reason for this commercial activity is down to three main drivers:
Post-pandemic demand: Many multinational companies have expanded their UAE footprint, local start-ups are scaling up, and family offices are also opening up in droves. Hybrid work is here to stay, but companies still want prestige addresses, especially along Sheikh Zayed Road, Business Bay and the environs of Dubai International Financial Centre, not forgetting that many of these office locations have virtually 100 per cent full occupancy, so there is a strong demand.
Tight supply: The office market hasn’t seen significant new stock for several years, pushing rents up by more than 30 per cent in some business districts.
Investment appeal: Commercial assets are increasingly seen as stable, income-generating products for institutional and private investors alike and with the limited supply of quality commercial spaces, it's no wonder that developers have decided to expand operations into this space.
Mario Volpi is senior vice president of investment advisory at Allegiance Real Estate. He has worked in the property sector for 40 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@allegiance.ae
