Why Palm Villa Landlords should encourage Tenants to Vacate
Most landlords will be grateful that in 2021 Dubai’s rental market experienced the biggest growth since 2014.
Villas and townhouses average rental values increased by 26.8 percent During 2021.
Apartments average rents increased by 14.3 percent during 2021.
However, there are reasons why some Landlords might want to encourage current Tenants to vacate early or at the end of the Tenancy Contract.
Rent review increases are restricted.
The RERA calculator limits the rental increases that Landlords can achieve on Tenancy Renewals. Many Tenants often end up paying less than the market rent on renewal in a strong and rising market.
A Signature villa has recently rented at AED 1,600,000 on Frond F.
However, if an identical Signature villa was currently at AED 800,000 the Dubai Rental Index will not allow the Landlord to increase the rent at renewal. The Tenant is therefore getting a villa far below current market rent.
Because the average for all Palm Jumeirah villas is used by the Rental Index, the Signature and Garden Homes often cannot get a rent review increase.
Buyers who want to occupy Villas pay more than investors.
Rented villas only really attract Investors because a Buyer wanting to purchase and occupy has to serve a 12 months notice on the Tenant to vacate.
Investors make offers based on “the maths”.
Potential owner-occupiers often make offers based on emotions.
Vacant villas often sell at 5% to 12% more than rented villas.
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