UAE – Residential rents have fallen across the board in 2020 with the sharpest drops witnessed in Dubai Land and Dubai Sports City.
According to market experts, the cheapest areas for rent right now are International City, Dubai Production City (IMPZ), a few projects in Dubai South and Dubai Land (Queue Point and Town Square) and Jumeirah Village Circle (JVC).
Overall the villas and townhouses have comparatively fared better than apartments as tenants look forward to upsizing. More indoor and outdoor spaces are in demand now, after an extended period of being restricted at home.
Prathyusha Gurrapu, head of research and advisory, CORE, explained: “The average apartment rents have fallen 10 per cent year on year (June 2019 vs. June 2020) and 6 per cent from the beginning of this year (Jan 2020 vs. June 2020). The average villa rents have fallen 9 per cent year on year (June 2019 vs. June 2020) and 5 per cent from the beginning of this year (Jan 2020 vs. June 2020).”
While the Covid-19 pandemic has created an environment of uncertainty, it’s said areas of high supply have been hardest hit by rent falls over the last 12 months.
Richard Waind, group managing director, Betterhomes, said: “Areas such as Business Bay and Jumeirah Village Triangle (JVT), which have very high levels of supply, have seen rents fall over 10 per cent in the last year.”
He added: “During the lockdown, rental activity at Bhomes fell by approximately 70 per cent, with only those with a pressing need to move actually finding a property digitally and moving via the permits scheme.
Since the lockdown, rental activity has rebounded to pre-Covid levels with two main drivers for tenants to move over the last period has been a search for greater value and the desire for more space.”
Experts also state that lots of supply over the last 24 months has meant tenants are faced with plenty of options. Therefore, many are driving a hard bargain with landlords to get the best deal.
Lewis Allsopp, CEO of Allsopp & Allsopp, opined: “Over the last three months, prices have dropped slightly. However, there is an influx of tenants registering their interest in properties on the market. Tenants are seeing the drop in prices as an opportunity to move to a more desirable community or a larger property for their family.
We are seeing more landlords accepting multiple cheque payments with 3-6 cheques now becoming the norm and in a lot of cases, landlords are accepting 12 cheque payments.”
However, property experts concur that the drop in rents has been arrested to a certain extent due to reduced number of properties entering the market in the recent months.
Craig Salmons, managing director, HMS homes, said: “Surprisingly, we thought prices would continue to reduce, especially during a global pandemic. However, it has not necessarily been the case. Most rents have stayed pretty consistent due to a reduced amount of properties entering the market. The majority of properties that we expected to come available during April, May and June were significantly reduced due to many tenants renewing or extending. This means at present we have more people looking for properties than those we have available for rent.
“In certain areas, such as Jumeirah Park and The Palm, we have even managed to get a premium on specific property types due to the lack of options available.”
Thus, the cost of living in Dubai is set to become more affordable as rents decrease across the spectrum. This in turn will enable local companies in the UAE to be more competitive.
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