UAE Property: ‘Is fear of missing out driving people to buy homes?’

Property prices in communities such as Jumeirah Beach Residence have seen double-digit price appreciation since 2021. Antonie Robertson / The National

Question: With property prices climbing and rents at record levels, many tenants I know are rushing to buy now “before it’s too late”. Is this fear justified? Are we seeing a “buy now or regret later” mindset? PH, Sharjah

Answer: My advice would always be not to panic. The time to buy your home is always now, be that today, tomorrow or whenever. It is all about the reason you are buying in the first place.

If it's to live in, then the timing doesn't matter. If the purchase is for investment purposes, I can say that the same applies but the exit or sale of the asset comes into the equation, so this would need to be considered.

There does seem to be a sense of urgency among tenants and with good reason. Dubai’s property market is seeing sustained demand from both end users and investors, with transaction volumes remaining high. In fact, 75 per cent of tenants have been reported to state that they intend on buying within a six to 12-month period, adding to the buyer pool currently looking to invest.

However, buyers should not make decisions driven purely by fear of missing out. Prices in many communities have already peaked or are close to doing so. For example, prime areas such as Palm Jumeirah, Jumeirah Beach Residence and Downtown have seen double-digit price appreciation since 2021.

My advice to tenants considering the move from renting to owning is this: buy for lifestyle, not speculation, especially if you are buying to live in. If you plan to stay in Dubai for at least three to five years, owning makes financial sense. You’re effectively paying yourself instead of the landlord, not forgetting you will also be the recipient of capital appreciation as long as this real estate bull run continues.

On the other hand, if your employment or residency status is uncertain, or you may need to relocate, it’s better to wait. Interest rates, while currently stable, can still influence affordability if they go up.

Dubai remains a city of opportunity, but smart buyers look for value, not hype. The coming launches of various off-plan communities also means better options are on the horizon, not forgetting the choices available to you in the secondary market, too.

Q: My landlord says he can increase my rent above the limit set by the Real Estate Regulatory Authority because he’s “improving the property”. He has neither shown any proof nor carried out any works yet. Can landlords bypass the rent cap this way and increase rents unilaterally? FH, Dubai

A: This is a question many tenants are asking, and the short answer is no.

The Dubai Land Department Smart Rental Index is clear: unless a property is newly registered (for example, after construction completion or a change in ownership through eviction for sale or self-use), the permitted rent increase must follow the index's percentage bands. The percentage increase for rent will depend on how far below the current market the amount is.

Landlords sometimes cite “upgrades” – perhaps new flooring, kitchen units or appliances – as justification to charge more. However, under Dubai Decree No 43 of 2013, cosmetic improvements do not enable rent increases outside the regulated limit.

If a landlord insists, the tenant can file a complaint at the Rental Dispute Settlement Committee, which will assess whether the works truly constitute a “substantial improvement”. In most cases, they do not.

The Smart Rental Index takes into consideration the rating of the apartment building. So, as long as the index states that an increase is allowed by taking into consideration the star rating, a landlord can go ahead and apply the increase.

My advice to you would be to ask for proof of any upgrade costs and refer to the index before accepting any rent adjustment. The system exists to ensure both fairness and transparency, regardless of market volatility.

The landlord must give you at least 90 days’ notice of any changes to the contract at renewal and this includes the rent. If this is not done, there will be no rental increase even if the Smart Rental Index states one is allowed.

Mario Volpi is senior vice president of investment advisory at Allegiance Real Estate. He has worked in the property sector for more than 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 [e-mail]