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Aretha Pretorius has been living with her husband in a three-bedroom villa in Dubai since 2019. However, last year the family received an eviction notice from their landlord stating that they wanted to move into the house themselves when the contract ended. Their vicissitudes are described on the BBC news site.
They started looking for property, but were shocked to discover that the annual rent for the house was 75% higher than the $34,000 (CZK 768,400) they had paid.
They expanded their search to other parts of the city, but couldn’t find a villa with a reasonable budget. In the end, they found a house that is significantly smaller than their current home and is far from the center, but which will cost them “only” $45,000 (just over a million crowns), or 32% more than the rent they have paid so far.
“For several weeks we ran around like crazy looking for a house. In the end, we had no choice but to compromise. Now we have to live in a smaller house and pay more,” Aretha told the BBC.
Aretha and Chris’ new home will be their fifth since moving to Dubai from South Africa in 2011. The real estate market in Dubai has gone through different cycles over the last decade, but Aretha says they have never had as much trouble finding a home as they did this time. “Ten years ago rents were quite high, but back then it wasn’t as difficult to get a house as it is today,” he says.
Dubai
- Dubai is the capital of the emirate of the same name in the United Arab Emirates and at the same time the most populous city in the country. The name Dubai City is used to distinguish it from the emirate.
- It lies on the coast of the Persian Gulf. Almost all of the emirate’s economic, social, cultural and political life takes place in its capital, where approximately 99% of the emirate’s population lives. Many of the city’s working residents live in the neighboring emirate of Sharjah, which lies just outside the city, due to lower rents.
According to real estate agency Betterhomes, average rents in Dubai have increased by 36% over the past year. But it’s not just people looking for a villa that face problems. Rents rose in all segments, including apartments. The rapid rise in rental prices is worsening the living conditions of expatriates, who form the backbone of the country’s economy. Almost 90% of the approximately 10 million inhabitants of the United Arab Emirates are foreigners.
Market demand has even forced some current tenants, such as Waquar Ansari, to move from Dubai to the neighboring emirate of Sharjah, where rents are lower.
Waquar and his family lived in a one-room apartment in southern Dubai, paying $9,500 (almost CZK 215,000) a year. When his lease expired last month, the owner wanted to increase the rent by about $3,000 (CZK 67,800). He was initially looking for a new apartment in the same location, but the rent here has risen by more than 40%. The only option was to move to Sharjah.
According to Dubai-based Betterhomes Group director Richard Waind, demand is outstripping supply in the current market. “Far more people come to Dubai than there is real estate available. “There is insufficient supply on the market, which is driving up rents,” he told the BBC.
Dubai has laws against so-called price gouging – raising prices to unfair levels – that allow landlords to increase the rent of existing tenants by a maximum of 20%. Landlords also cannot evict tenants without giving reasons.
However, many tenants, who did not wish to be named, told the BBC that they had received eviction notices saying the owners wanted to move in themselves, apparently bypassing tenant protection rules.
However, the record values are not only influenced by rents – the prices for property purchases have also risen significantly. According to real estate agency Savills, house prices will rise by 35% in 2022 compared to 2020.
The Russians don’t care about the price
According to Katie Burnell, deputy director of Dubai-based Savills Middle East, Russian cash is the biggest factor driving demand in both purchases and rentals. It came into play after the outbreak of war in Ukraine last year.
Dubai has become a haven for wealthy Russians, including oligarchs, billionaires and start-up founders. Many young Russians have also moved to the glamorous city in search of new job opportunities. Several multinational companies have also relocated their employees from Russia to Dubai. Overall, Russians were the largest foreign investors in Dubai real estate.
“There are many restrictions on where Russians can live or buy property. There are no such problems in the United Arab Emirates. You can do business here and function financially,” Burnell told the BBC.
“Thanks to this, they do not focus at all on the price level in the real estate market and are ready to pay any price.” It is estimated that hundreds of thousands of people have left Russia since the start of the war. According to a report by Russian magazine Forbes, 700,000 Russian citizens have left the country since September last year.
The United Arab Emirates has held a neutral position since the beginning of the conflict in Ukraine. They did not impose sanctions on Russia or criticize its invasion of Ukraine. They provide visas to Russians who are not subject to sanctions, while many Western countries have restricted them.
Last month, the Central Bank of the United Arab Emirates granted a license to Russian bank MTS. Due to Western sanctions, Russian citizens have had difficulty opening bank accounts and transferring money in the country.
Since the Covid pandemic, the Emirates have introduced several new long-term visa options, eliminating the need for a sponsor. This attracted a wave of investors, remote workers and entrepreneurs to the country and created more job opportunities.
Richard Waind argues that the global events of the last three years, including the pandemic and the war in Ukraine, have strengthened Dubai’s attractiveness as a major financial center, which in turn has boosted the domestic real estate market.
“Dubai offers security, lifestyle and ease of doing business. This is an important factor why people from many countries move here.” However, there are fears that if rents continue to rise, many tenants will have to move out and many people will move from Dubai to other cities in the UAE.
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