Landlords are willing to be flexible but they know tenants can’t move easily, brokers say
Residents across the UAE have faced difficult financial decisions in recent months amid the upheaval caused by the coronavirus pandemic.
Among them is whether they could save on what is likely to be the biggest expense in their budget – rent.
But has the market shifted enough to justify the cost of moving? Rents in Dubai and Abu Dhabi have been declining for the past few years on the back of lower oil prices and a property supply glut, although research showed rents were beginning to stabilise in the opening couple of months of 2020 before the full force of the pandemic arrived.
We spoke to various property brokers to find out whether there are bargain deals to be found.
Dubai: More flexibility on cheques and break clauses
Significant shifts in rental rates are yet to be confirmed as the effects of the pandemic are not fully realised. However, brokers are seeing downward changes in pricing, and differing behaviour and attitudes from landlords and tenants.
Nick Grassick, managing director at PH Real Estate, tells The National he has experienced a downward shift of up to 15 per cent during the past three months across all communities and more flexibility with regards to the number of cheques and the inclusion of break clauses.
He reports a rise in tenant and buyer inquiries as there “is a realisation that landlords are in much greater competition”.
“I qualify this statistic with recognising a percentage of the tenant inquiries will look to benchmark property values to then leverage their existing rents downward,” he says.
“Recognising each home that is rented is typically owned by a different person, with their own personal motivations, the flexibility and variance stated above is obviously not uniform, indeed, some owners have showed no tolerance to the changing market and are still staunch with their asking prices.”
Three to six cheques is now the norm, with 12 payments in some cases, according to Lewis Allsopp, chief executive of Allsopp & Allsopp.
In terms of finding good deals, he highlights a one-bedroom garden apartment in Zaafaran 2, Old Town for Dh85,000.
“A three-bedroom apartment in Trident Grand, Dubai Marina can be rented for Dh115,000 and a very popular development at the moment is Akoya Oxygen by Damac where a three-bedroom villa can be rented for Dh65,000,” he adds. “This development is relatively new and the properties are modern and fresh with large plot sizes so this price is extremely attractive.”
More monthly payment plans
Among the deals being offered is a monthly payment plan through Aldar, which has a residential portfolio of 5,000 units.
Three-bedroom apartments at Gate Towers on Reem Island are now listing for between Dh110,000 and Dh115,000 a year, while one-bedroom units are around Dh55,000.
The recently-opened Kite Residences on Reem Island is another location where tenants can obtain a deal – in this case 12 payments and two months free. Two-bedroom units are from Dh110,00-Dh120,000, while three-bedroom homes are Dh142,000.
Ben Crompton, managing partner at Crompton Partners, says apartments targeting the higher end of the market are “huge” and “slowly filling up”.
He describes the current market as being in “a holding pattern” with no new arrivals into the country.
“I’d say we’re seeing about 40 per cent of our normal rental business for this time of year, and once commercial flights start up again that will change,” he says.
“The situation has been favouring landlords because tenants are renewing as they have nowhere to go. If you are a tenant, there isn’t much availability as people haven’t moved out yet – what is empty and available has been for some time. So, for landlords with sitting tenants it is OK at the moment, but those without a tenant will have to manoeuvre.”
He added that while an increasing number of tenants are asking for break clauses to be inserted into tenancy contracts, this will take time to become the norm and will require banks, who own a large bulk of units, to take the lead on this.
