A residential neighbourhood in Bur Dubai where rents have dropped significantly this year. Image Credit: Gulf News Archives

Dubai: Existing as well as new tenants are successfully negotiating hefty discounts from landlords as house rents rates continue to drop sharply in Dubai and Sharjah, real estate agents and residents told Gulf News on Monday.

According to real estate agents, the supply is much greater than the demand, giving tenants the leverage to negotiate better rents.

Taking advantage of the market, tenants are getting discounted rents even in prime areas like Bur Dubai, Gold Souq and Garhoud in Dubai, while Sharjah areas like Al Majaz, King Faisal Street and Al Khan have also witnessed significant drops in rent.

The drop has created a new buzz in the real estate market with a lot of people trying to take advantage of the situation, going for cheaper options.

The situation has given one section of the market a field day — the real estate brokers.

 We have been paying Dh95,000 for our two bedroom apartment for the last five years, but this year we could negotiate with the landlord and we got a discount of Dh5,000.”

 - Sajjad Ahmad | A trader based in the Gold Souq area for the last five years 

“It’s a customer’s market now. The rents have gone down between 20 to 30 per cent in some areas and that has given people an opportunity to either negotiate with their landlords or look for other options, keeping us busy,” said Imran Khateeb, sales manager at Mak Homes Real Estate.

Mohammad Khalid has been living in a studio apartment in Al Baraha for almost six years, paying a higher rent after each renewal, but for the first time last year he was happy to get a discount.

“When I rented this apartment in 2012, I was paying Dh25,000 per year and it kept increasing every year and almost doubled to 43,000 in 2016. Thankfully, a lot of apartments in the building were vacant and I could negotiate with the management for a discount. This year I got further discount and I now pay Dh32,000,” said Khalid, an Indian expatriate.

Gold Souq, one of Dubai’s busiest commercial districts, where the demand for a commercial or residential property never goes down, the tenants are finally getting some relief.

“We have been paying Dh95,000 for out two bedroom apartment for the last five years, but this year we could negotiate with the landlord and we got a discount of Dh5,000. Though it is not significant but getting a discount in Gold Souq is not easy because there is always a demand, but the situation is changing now,” said Sajjad Ahmad, a trader based in the Gold Souq area for the last five years.

The situation is not much different in Sharjah either.

Yasir Muallim has been living in a two bedroom apartment in the HSBC Building on King Faisal Street for 15 years and has seen both the highs and lows of the real estate market.

“I have lived in the same apartment for 15 years now. I first rented it for Dh34,000 and has paid as high as Dh50,000 when the market was booming. Last few years I have been paying Dh44,000 but this year I got a reduced rate of Dh40,000,” said Muallim, who is a senior manager with a leading watch retailer.

Shiva Kumar, another long time Sharjah resident, got an event bigger discount.

“I have been staying in the same apartment for 18 years and I was paying Dh46,000 last year. This year during the renewal they offered me 44,000 but I could negotiate with them and get an additional 2,000 dirhams discount,” said Kumar, who is based in Jamal Abdul Nasir Street for the last two decades.

In Al Khan, another sought after area in Sharjah, Abu Mousa got a discount of Dh4,000 for his one bedroom apartment.

Real estate agent Salahuddin Sarfaraz says that the slump is not restricted to a few areas or the residential properties alone.

“Even the commercial properties are going at lower price in prime locations like Port Saeed near Deira City Centre. We used to rent out offices in Port Saeed for around Dh130 per square feet, but now it is going for around Dh100 per square feet and it might go even lower,” said Sarfaraz, General Manager of Jukaku Real Estates.

He added that even areas like Bur Dubai and Al Mankhool, which always had availability issues resulting in increasing rents, are seeing a slump now.

“There was a time when we would struggle to find a single apartment available in Bur Dubai, now the situation has changed, so a two bedroom apartment is now available for between Dh85,000 and Dh80,000 down from Dh110,000 to Dh120,000,” he added.

Another area that, according to Sarfaraz, has seen a big hit is Jumeirah, where villas are hardly finding any takers.

“In Jumeirah, a 3-4 bedroom villa that was earlier going for 250,000 per year is now available for Dh180,000, still the availability is very high. There is a similar situation in Garhoud and Mirdiff, customers are getting picky since there are a lot of options,” added Sarfaraz.