Landlords becoming flexible more than ever, with asking prices down by almost 30%.
With landlords across Dubai being more flexible than ever before when it comes to prices, rent-free periods, and payment terms, this is arguably one of the best times to be a tenant.
According to the ‘Property Finder Trends’ report, Dubai apartments’ advertised rental asking prices have dropped almost 30 per cent in the last two years, with more than half of that in the last 12 months alone. In the second half of 2018, the biggest falls in advertised apartment rents were seen in the Green Community at 9.3 per cent, followed by JLT at 8.7 per cent, and DIFC at 7.5 per cent. Villa rents in Dubai dropped 11.3 per cent over the past 12 months and 22.2 per cent over the past two years.
“More and more families are taking advantage of the current market situation to relocate from an apartment and upgrade to a villa with more space and a garden. It’s no longer a case of where one can find a suitable property, but deciding which to choose,” said Lukman Hajje, CCO at Property Finder.
Fadi Nwilati, CEO of Kaizen Asset Management Services, noted that landlords are taking several actions to attract tenants to their properties. “These include upgrading their property to make it stand out from other identical units, furnishing their properties, offering all-inclusive pricing to include the various utility bills, offering flexible lease terms, reduce rental rates in comparison to others and lastly allow for flexible payment terms. The latter, flexible payment terms, seems to be the most effective as a short term measure to improve occupancy. In certain areas, tenants prefer flexible payment terms, such as 12 cheques, and landlords can fill their properties without having to drop rent below comparable properties.”
Similarly, Lewis Allsopp, CEO of Allsopp & Allsopp, said that gone are the days of a company paying rents for their employees in one cheque. “Most people looking to rent don’t have the luxury of having a lump sum of cash available to pay for a full years rent in advance. The more flexibility a landlord shows in regard to cheques, the higher the chance of renting their property promptly and receiving a greater rental price.”
“In addition to accepting multiple cheques, more landlords are signing up to property management contracts to entice tenants,” he said. “The convenience of renting a property which is managed is the satisfaction of knowing that someone is on call 24/7 to offer assistance and that any issues a tenant has will be attended to. In addition to this, the property is much more likely to be in good condition to start with which is always beneficial to tenants.”
Allsopp also noted that landlords of more established communities are lowering prices to compete with new developments. However, he said that this trend will not last forever, and that in time, demand will catch up with supply and landlords will start to see greater returns on their investments.
Property Finder also showed that outlying communities with imminent handovers will continue to see more pronounced rent declines, while established neighbourhoods with good amenities will continue to buck the market trend and see steady demand. Over the past six months, big drops in advertised rents were seen in villas in Damac Hills, Victory Heights, and Dubai Silicon Oasis. However, centrally located communities such as The Lakes, Arabian Ranches, and Arabian Ranches 2 witnessed small increases in their median advertised rents.
Comments by Haider Tuaima, head of Real Estate Research, ValuStrat said that landlords try to retain their tenants so as to maintain occupancy.
“Some building landlords in high competitive areas took strategic steps to ensure a better standard of living for their existingas well as new tenants by improving services such as building maintenance and facility management, gyms, swimming pools and lifts would be frequently maintained with common areas including outside façades and parking areas regularly serviced and cleaned,” Tuaima said.
Shaher Mousli, CEO of Arthur Mackenzy Properties Group, said that there is an increasing preference to buy instead of renting these days with convenient long-term payment plans of five to 10, and even 15 years for a ready property being offered to home buyers. “This gives an opportunity to every tenant to consider buying instead of renting. Now, there are also lease to own options where the rent paid over a period of time is converted into price installments for a villa resulting in the tenant eventually becoming the owner. Developers and landlords are recognising the trend and offering payment plans that are convenient and hassle-free for tenants.”
“With Dubai wide rental prices under continued pressure, landlords should take the time to explore and evaluate the different income structures available across Dubai, in addition to one year rental agreements,” said Jake Wright, investment director at Smart Crowd. “Residential units in most developments can be registered as short-stay holiday homes, providing the unit is registered and managed by an operator, authorised by the Department of Tourism and Commerce Marketing. Under this structure, the unit has the potential to generate greater returns. The landlord can pay a percentage of revenue to the operator, or, in some locations, operators may agree a lease for 2+ years, providing the landlord with guaranteed income and mitigating vacancy risk.”
News Credit: Khaleejtimes