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Most Dubai tenants don't get rent cuts: survey

Only 10 per cent of polled tenants are getting rental reductions

Dubai Marina as seen from the Jumeirah Lake Towers
Image Credit: Pankaj Sharma/Gulf News archive
Still paying more on housing? The problem may just be because many tenants fail to effectively negotiate with landlords.

Dubai:  While property analysts have been claiming that housing costs in Dubai have fallen, about nine in ten tenants are not getting any relief from high accommodation expenses.

Findings of the latest survey released by compareit4me on Monday showed that approximately 90 per cent of residents in the emirate reported that their rents have either remained stagnant or risen since last year.

Out of the 300 individuals polled, nearly half (42.6 per cent) said that their annual rents have increased, while 47.1 per cent said their landlords have not asked for any adjustments.  Residents that are having a hard time securing lower rents are those living in Bur Dubai, Deira and Jumeirah, among other locations.

In Jumeirah,  about four in ten tenants (40 per cent) said their annual rents increased by 5 per cent to 10 per cent, while the rest said their rates had stayed the same.

In Bur Dubai, nearly six in ten (57.1 per cent) said they had to set aside more money for housing, with their rents rising mostly by around 5 per cent to 10 per cent in the last year, while in Deira, 50 per cent of those polled said their paying about 10 per cent to 15 per cent more for annual rents.

Only a small segment in the population (10 per cent) have benefited from rental reductions, with price cuts reported in Al Barsha, The Palm Jumeirah and Jumeirah Lakes Towers. Among those who did get some rent cuts, 71.4 per cent reported downward rate adjustments of 5 per cent to 10 per cent.

“This flies in the face of numerous reports claiming that rents in Dubai are falling, and that the environment has swayed in tenants’ favour,” compareit4me said.

Jonathan Rawling, CFO of compareit4me.com, said that while there seems to be a disconnect between tenants’ feedback and market research reports, they’re not saying that analysts are spreading the wrong information about rents.

Several market research reports have said that the residential market in Dubai continued to post declines in 2017. Landlords are not just reducing rents, they’re also agreeing to more flexible terms, such as tenancy extensions and more lease instalments.

According to CBRE, rates fell by an average of 1 per cent during the first three months of the year compared to the previous quarter. “With rental rates still falling almost universally, landlords are becoming noticeably more flexible, with tenants able to negotiate rentals down from quoting rates,” the commercial property and real estate services adviser said.

“While we cannot say that a consultancy with such high standing has got it wrong, there does appear to be some disconnect between what market reports say about rental rates in Dubai and what people are actually seeing on the ground,” said Rawling.

Sonia Ocampo (name changed)  is one of those tenants in Dubai who disagree with the market reports. She said she has just seen her annual housing expense increase to Dh32,400 a year.

The expatriate and her small family is sharing with other tenants a two-bedroom flat along Shaikh Zayed road. “Our monthly share used to be Dh2,500 a month, but it has now gone up to Dh2,700,” she said. “We were told that the owner of the flat has just increased the rent by 5 per cent from Dh80,000 a year.”

A source who handles property advertisements, however, said that the overall picture looks different, with the rates being published by landlords showing a 5 per cent to 10 per cent decline. “Properties of all sizes, from studio to three bedroom apartments, have registered lower rents,” the source told Gulf News.

Rawling said the disconnect may have something to do with the fact that residents are not aware that they could now have more negotiating power with the landlords and that they “simply accept their lot when it comes to renting.” In fact, several survey respondents said that they had not thought to ask their landlords about a reduction in their rental rates.

“Our best explanation for this is that renters in Dubai aren’t aware that the market could now be more favourable to tenants.”

As to which areas in Dubai can offer rental relief, the survey showed that Al Barsha, The Palm Jumeirah and Jumeirah Lakes Towers emerged as the top-scoring locations for lower rental rates, with the majority (71.4 per cent) of survey respondents living in these areas reporting a decrease of 5 per cent to 10 per cent compared to last year.

For information on the real estate sector within the UAE, please visit our sister site, getthat.com.

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