Tenants in Dubai will remain in the same position to bargain for lower rents in 2021 as landlords vie for tenants in the market which is still recovering from coronavirus pandemic, a new report suggests.
Data stated this week by real estate consultancy CORE showed that rents for the properties all over Dubai have been lowered at a faster pace in comparison to sales prices, falling by up to nearly 50 percent over the last 6 years’ time span.
From the highest rents which were witnessed in 2014, residential units in apartment districts have fallen to more than 40 percent, with many areas showing cuts over the 45 percent mark, this data was provided by CORE, Rents for villas have also brought down to nearly about 33 percent since 2014 peak levels.
“Most landlords are willing to negotiate lower rents and flexible lease terms upon renewals to retain tenants,” Prathyusha Gurrapu, head of research and advisory at CORE, told Zawya.
Gurrapu added, “Mostly, landlords are providing longer rent-free periods, a higher number of cheques and lower headline rents to attract or retain tenants”.
In its report, CORE noted that landlords in apartment districts are particularly willing to negotiate to keep their units occupied. “With household incomes expected to remain under pressure, we foresee most tenants remaining price sensitive,” it said.
Yet, Gurrapu highlighted that rental falling this year will be different across districts, considering that a few established villa communities could witness some flexibility, in comparison to last year’s uptake and also recent limited supply.
On the other hand, most apartment districts have some room for further contraction. As the market remains price sensitive, flexibility in lease and payment terms are expected to continue,” Gurrapu continued.
Newest Rental Prices
Tenants who are expecting to move house in recent times can expect to pay about 32,500($8,800) to 50,000 UAE dirhams. This is the cost of a one-bedroom apartment in Discovery Gardens, which is situated on the Q3 2020, figures, the recently compiled data, accounted by Asteco. In International City, the cost for alike units is lesser, at 20,000 to 32,500 dirhams.
Q3 2020 average rents for apartments have decreased to 43 percent less as compared to their Q2 2014 which was the peak levels according to Asteco.
The rental value in Dubai was falling even before the coronavirus crisis. This was mainly due to the huge supply glut in the market.
Areas which have Most Rents Falling
Analyzing year-by-year data, rents have fallen the most in Dubailand, this recorded a total of 19 percent decline in last year, this is given by CORE.
The Greens and The Views are one of the least performing markets, posting declines of 17 percent and 15 percent, along with Reem-Mira and The Villa in Dubailand, both encountering a downfall of about 11 percent.
Outlook
ValuStrat provided that the market is about to take a turn and more in an upward direction this year, mainly with the hosting of the World Expo and positive developments around COVID-19.
“Subject to the health crisis being resolved, the economy is expected to improve and with Dubai Expo and the 50-year anniversary of the UAE, market sentiment is expected to pick up and could head towards bottoming out during 2021,” ValuStrat said.
CORE also claimed that there are still more supply concerns over the property market, although developers here have cut back on new project launches.
“While oversupply concerns persist in the near term with ample new supply and unabsorbed inventory, new launches were at the lowest level in 2020 compared to the last eight years. We expect new launch volumes to further reduce in 2021 as developers re-strategize and focus on the absorption of existing inventory,” said CORE.
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