According to real estate industry executives, UAE residents renting for the first time will have to pay more for smaller spaces because of an increase in rentals and a shortage of villas.

With movement restrictions triggered by the pandemic, the demand for larger apartments and villas has increased. Today, even though Covid cases are dropping and precautionary measures have been eased, the demand continues to grow. This meant new tenants entering the market will have to bear with the new reality of paying more for less.

"New tenants entering the market should be aware that their money will be wasted less than those who have already been in the market for a while and have a larger apartment." Even though rents are going up, those with larger units are likely to hold onto them... therefore, there are more available smaller units," Morgan Owen, managing director of Provident Real Estate, explained.

New buyers are shifting to apartments due to annual contracts that make it easier to move every year, according to Ali Rao, group CEO of Kingsley Properties.

Many residents continue to live in smaller apartments because they realize that the changes they adopted during Covid-19 were more sustainable and cost-effective.

According to Ayman Youssef, vice-president at Coldwell Banker, UAE, there is a lack of villas and townhouses in the market, which is driving up prices.

It is true that the trend is not as aggressive in apartments, but we are seeing a steady increase in demand for luxury-serviced apartments and sea-facing apartments. The affordable segment has seen a moderate price increase.

Furthermore, Owen explained that landlords are also moving towards the 'holiday home concept' as this gives them better yields and flexibility.

Furthermore, landlords are beginning to realize the importance of property management, which makes the process easier for tenants and landlords alike.

In addition, Rao said there is palpable excitement among investors who see holiday homes as a great way to earn more rent.

Your next living room might be rented instead of bought

A holiday home owner can earn anywhere between 10 and 50 percent more than a traditional long-term rental, according to Shilpa Mahtani, COO and co-founder of BNBME Holiday Homes by Hoteliers.

Positive reviews and our marketing help homeowners earn 25 percent more annually once they start renting out their houses, she said.