Dubai: More developers in Dubai are adding ‘rent-free’ periods on residential contracts to try and get buyers to favour them. These are typically of one- to two-month duration – but at a time when buyers are looking to every way to cut down on costs, that rent-free helps them quite a bit.
The rent-free applies to ready properties, and where the developer has signed up a buyer on a rent-to-own scheme. So, the payments begin to kick in after the rent-free phase.
Rent-free offers are a constant in office and retail leases, but its appearance in residential sales show the number of new homes that are being delivered and awaiting buyers. These days, developers will need all the marketing skills and incentives at their disposal to convince people to buy.
“Residential transaction activity decreased by 20 per cent in first-half 2020 vs first-half 2019, primarily due to lockdown measures and travel restrictions to combat the spread of COVID-19,” CBRE notes in a new report. “As these restrictions have been eased, developers and landlords are increasingly offering a range of incentives such as discounts on Land Department fees, longer payments plans and rent-free periods, as an attempt to attract buyer and enhance transaction activity.”
CBRE expects 35,000 new homes to be delivered in Dubai this year. But that's on the higher side compares with most other estimates, which place handovers as more likely being around 20,000 units.
Whatever be the final tally, overall Dubai property values and rentals should remain on the softer side.
According to Dima Isshak, Senior Manager at CBRE Consulting, “There are three key challenges to recovery: subdued consumer demand; lower disposable income, and restrictions in occupancy of retail and commercial space. These in turn are impacting the real estate sector, which is having to adapt and evolve to the ever changing demands of the pandemic.”