Rents are becoming so expensive in Dubai that two thirds of tenants plan to move home when their lease is next renewed to save money.
Around 85% of tenants said their rent had increased this year and that the cost of renting a home was becoming too much for them.
Landlords increased rents by more than 10% for almost half of all tenants in the desert city, many of whom are expats.
However, letting agents in Dubai claim the rate of rent increases will start to slow soon as more property comes to the market to ease supply problems.
A report by property consultancy Asteco said rents fell back by 3% between the end of the second and third quarters of 2014, but year-on-year hikes were still in double figures.
Jumeirah Lakes Towers saw a 42% rent rise, Dubai Marina a hike of 36%, while rents in Palm Jumeirah and Sheikh Zayed Road saw increased by 21% in the year.
Even less favoured neighbourhoods, like Discovery Gardens and International City saw massive rent rises of between 25% and 40%.
“These huge rent increases are going hand in hand with surging property prices which are making many of Dubai’s residential districts too expensive for expats,” said an Asteco spokesman.
“The result is people are moving away from primary residential areas to neighbourhoods they may not want to live in but can at least afford the rent.
“In a lot of cases, tenants are moving out of Dubai into other Emirates with cheaper rents.”
Property agents are concerned this ripple effect will only serve to push up demand for housing in other Emirates – and rents and property prices as well.
Homes too expensive
This view was reflected by another Dubai housing survey by international property consultancy Colliers.
The firm observed that more than 50% of all households in Dubai can only afford rents in the range of Dhs32,500 to Dhs54,000 a month, which has put all but a few rental properties outside the financial grasp of many workers.
Property industry experts do not expect house prices or rents to fall, because new properties coming to the market are still too expensive for huge numbers of locals to buy, so investors are snapping them up.
They are then marketed at the luxury end of the market, beyond a price most residents can pay.