Dubai’s record property demand is creating a nightmare for some

DUBAI, United Arab Emirates — Demand for property in the United Arab Emirates’ glitzy commercial capital of Dubai hit a record high for the first two months of 2023, real estate services firm CBRE revealed in a report published Thursday.

In February alone, Dubai’s residential market saw 8,515 transactions — a whopping 43.9% increase from the previous year. January and February together clocked a total of 17,741 residential transactions.

Beyond the property market, Dubai’s economic boom is evident in everyday life.

Every week, a new high-end restaurant seems to appear in the desert emirate, which morphed from a small fishing village to a bustling, hyper-modern metropolis within just the last few decades. Downtown bars are crowded most evenings. The city’s Roads and Traffic Authority recently reported record road traffic and public transport use in the last year. Residents frequently complain that ordering a taxi on any evening of the week — even a Monday night — takes longer than ever.

But while some Dubai residents — roughly 90% of whom are expats — find the struggle to book a ride or a restaurant table frustrating, it’s the sharp and often extreme increase in rents that are hitting many of them the hardest.

“A 60% increase,” one Dubai-based consultant told CNBC when asked about how much their rent had increased year-on-year. The consultant, who was living in Dubai’s high-end financial district, the DIFC, decided to relocate instead of paying the new rent. Several other DIFC residents reported landlords asking for rent increases of 50% and higher, and many of those have downsized or moved to less expensive areas as a result.

Dubai’s Land Department has a body called RERA, the Real Estate Regulatory Agency, which states that landlords cannot demand a rent increase beyond a certain percentage based on the property’s current market value. But the DIFC operates as its own legal entity, unbound by RERA rules.

“Essentially the DIFC is the wild wild West,” the consultant said, requesting to not be named due to professional restrictions. “No controls whatsoever.” The DIFC Authority did not reply to a CNBC request for comment.

Even outside of the DIFC, though, rents and selling prices are soaring.

“There aren’t enough properties; the Dubai Land Department has recorded an 8% availability which is the lowest since 2008,” said Nazli Acar, a sales and leasing agent at D&B Properties. “Property owners are aware of this, hence why they keep increasing their rental prices. And believe me, there are people willing to pay the price.”