A Dh1 million luxury car and a night in the world's tallest tower complete with groceries have been offered as bait as the great rental hunt in the city intensifies. It's prompting New Dubai landlords to offer extravagant deals to outbid each other to secure tenants as a massive surplus of properties outstrips demand.
Industry sources estimate there might be between 50,000 and 100,000 residential units oversupplied by the end of next year, taking the market years to absorb.
The Dh1 million 2010 Maserati car was for the buyer of the Dh3.5 million Marina Six Towers apartment. The deal, listed by Powerhouse Properties, has not been taken to date, but is still negotiable.
Other owners have also become creative to tempt tenants with non-cash offers in a bid to halt the rental price crash.
Lars Hansen, Owner of Larsen and Hansen Real Estate, said some property owners are offering incentives to tenants like free TV and internet services to stem the fall in rents.
Some landlords are even willing to pay relocating costs, including packing and transport. Some are bypassing agents to save on commissions and are advertising online.
Hassan Al Shouli, marketing manager of a UAE-based website, said with increasing competition, residential rental listings seem to have doubled in the past three months in Dubai and Abu Dhabi.
Attention-grabbing deals were witnessed for the first time late last year.
At that time, the first online deal for a night in the world's tallest tower complete with groceries for $285 (Dh1,045) was offered at www.mydubaistay.com as the landlord was among the estimated 800-odd luxury apartment owners who were unable to secure long-term tenants.
The website's manager said the offer had to be called off as it upset nearby hotels. Finally, the apartment successfully fetched short-term rentals with a minimum five-night stay deal.
Real estate agents predicted rents in Dubai will drop for another 12 to 24 months. They are expected to bottom out when rents fail to make up for the "hassle factor" of owners managing repairs, maintenance and associated costs, etc.
Selling not realistic
According to Mario Volpi, Leasing Manager of PowerHouse Properties, most owners ideally want to sell rather than rent. However, given the current market, selling was not a realistic option for those who have been forced to rent to offset any debt, he said.
PowerHouse agent Levent Hassan said the Dh1 million limited edition free luxury Maserati car was on offer as the owner was eager to sell his apartment rather than rent it out.
However, Hassan said in many cases there is a stand-off between owners who bought in boom time — as they refuse to drop prices — and tenants who are spoilt for choice in the market. He said he has to educate such owners on a daily basis about what to expect in current market situation.
Volpi and Hassan said Jumeirah Lake Towers and Marina are the most oversupplied areas. They predicted a deadlock when landlords may get fed up with the hassle of renting properties and took them off the market, reducing supply.
Already, a few landlords who spoke on condition of anonymity said they chose to keep properties vacant as the rental income failed to cover maintenance and services fees and the "hassle factor" was just not worth it.
This is good news as it’s now clear that landlords have stopped becoming greedy. Great work… hope they stay the same as time changes.
Shaheen, Sharjah, United Arab Emirates
Added 20:28 January 13, 2011
Nothing is happening in Bur Dubai and Karama areas where rents are still the same as before and have even increased by 10 per cent.
Naresh , Dubai, United Arab Emirates
Added 16:58 January 13, 2011
Sometimes the Almighty intervenes for the benefit of others. God, after all, is the greatest leveller of all!
Amit Bhattacharjie, Dubai, United Arab Emirates
Added 16:57 January 13, 2011
What goes around comes around!
Moiz, Dubai, United Arab Emirates
Added 16:40 January 13, 2011
The real needy are those who don't have food to eat or can't afford to feed their starving children or find a shelter to sleep. Landlords should be happy -- they have so many properties in this beautiful country. In fact, they must stop complaining.
Karim Lamrani, Dubai, United Arab Emirates
Added 16:06 January 13, 2011
Are these landlords the same ones who were once inconsiderate and rude to tenants? It’s surprising that they are now offering these luxurious benefits to us. Knowing these landlords, I’m sure most tenants will avoid them because of their attitude and greed. I have seen tenants requesting and even pleading landlords to reconsider rental prices two years ago, but due to greed, these property owners never listened to us. I am so happy that they have learnt a lesson.
Jessin James, Dubai, United Arab Emirates
Added 15:52 January 13, 2011
Newspapers continuously report on rentals going down but that’s not what is actually happening. I just received a five per cent increase on my rentals recently, which has really affected my budget. The five per cent rent hike every year must be scrapped.
Amira, Abu Dhabi, United Arab Emirates
Added 10:11 January 13, 2011
Keeping away middlemen from the market may help investors realise the actual value of their properties. Tenants can then have their money’s worth. It is these middlemen who have inflated the market with false projections. They have not only pushed investors into a trap but have also made life hell for hundreds and thousands of tenants. Advertise online or in newspapers to market your property. Landlords must avoid middlemen -- only then will landlords and tenants stand to benefit. Remember, the middleman has nothing to lose -- his hard earned money is not at stake.
Ali Bhakthavar, Nizwa, Oman
Added 10:02 January 13, 2011
Rents have not gone down as they’ve been projected. Compared to other countries, UAE rents are still very high and beyond the reach of middleclass residents. Salaries are, in fact, going down. Food prices have also increased.
Vinesh Kumar Manwani, Dubai, United Arab Emirates
Added 09:55 January 13, 2011
Landlords are not desperate in Dubai. They are wise to innovate smart ways to get business in difficult times. In Abu Dhabi, tenants are really desperate. Thank God that the rents are coming down, though not so much as compared to Dubai’s real estate sector.
Pravin, Abu Dhabi, India
Added 08:48 January 13, 2011
Have the landlords understood the reality of the market or do they at all read the homeowner’s manual? Your article states that landlords prefer to keep properties vacant as rental incomes fail to cover maintenance costs and service fees and the hassle factor is just not worth the headache. But property owners still need to pay maintenance and service fees to developers. So why bother about “not covering maintenance costs” -- in the end they at least get some money!
Tenants in the UAE face a completely different situation than those in other parts of the world. Most residents here have bought properties with the intention of reselling them for a profit. But due to recession, this strategy have not worked well. These property owners are now desperate to earn quick money to repay interests on their loans.
Property owners did not realise the high-risk involved in real estate monopoly not did they understood the demand-supply rules in the sector.
Landlords today are considered lucky if they get an offer on their properties. I know apartment owners who haven’t had tenants for months.
I used to live in Downtown Dubai. When my apartment was due for renewal, I requested the agent of my landlord to lower the rent. She refused and instead demanded a hike! I then sent my landlord a text message saying “Thank you” for the three years that I stayed in his flat. He immediately asked me as to why I wanted to leave and immediately offered me a lower rent.
This is what happens in the UAE. Skilled real estate agents look for tenants who are ready to pay more rent in fewer cheques. The agent with whom I was dealing with wanted maximum commission. In the end, however, I moved out and the apartment is still vacant. What’s worse the landlord is now offering it for a lesser rent.
It will still take a while for the real estate market to stabilise -- but rents will never be the same again. The scenario may become worse when banks may start auctioning apartments to recover loans.
Downtown Rocker, Dubai, United Arab Emirates
Added 07:10 January 13, 2011
Do these landlords remember those days when they squeezed the last drop from our wallets? Let them be more desperate.