DUBAI: Indian expatriate Sabita and her family of four were living in a five-bedroom villa in Satwa until recently. Last month, they moved into a nine-bedroom property in Al Jaffiliya.
“We could rent the bigger villa for just Dh190,000 a year. It was a steal, considering we were paying Dh240,000 for our five-bedroom place earlier.”
Similarly, a senior expat couple from the United States who were renting a three-bedroom apartment in an old building in Bur Dubai for Dh200,000 moved into a high-floor, three bedroom, Burj Khalifa-facing apartment, for Dh190,000.
Elsewhere, other expats said they have been able to renegotiate better prices for their existing homes with landlords only too willing to accommodate their requests (see residents’ comments below). According to realtors, there is no better time than now to either upgrade or renegotiate, as the property market has softened further, taking rentals to new lows.
Dilip Daswani, managing director of Capitol Real Estate, which has helped lease out more than 40,000 units in the old districts of Bur Dubai, Karama and Deira, said: “Rentals are falling steeply — by 40-50 per cent in some cases. Landlords who are holding on to old rates are losing out. A one-bedroom apartment in Bur Dubai, which was going for Dh84,000 earlier, is now available for Dh45,000. You can get a studio for Dh25,000-Dh32,000; a two bedroom for Dh80,000 and a three-bedroom for Dh90,000.”
Bigger and better
The trend is apparent in the newer districts too. Arif Mubarak, CEO, Dubai Asset Management, which leases out properties in Ghoroob, Shorooq, Al Khail Gate, Layan, Remraam and Dubai Wharf, said: “A key trend we have observed — as a result of the softening rental market — is that residents are taking advantage of the price differentials and upgrading to bigger, better spaces.”
The current market scenario has also prompted developers and landlords to introduce attractive payment plans, he said. Rents payable in 12 cheques and discounts with waiver of one-to-two months of rent are among the more popular offers.
There’s another discernible pattern in some neighbourhoods.
As Mubarak explained: “We have recorded a strong uptake from residents interested in upgrading their current living spaces — but preferring to do so within their existing communities. We attribute this primarily to the convenience and comfort that residents enjoy, with ease of access to schools, retail and recreational amenities, and the feeling of neighbourhood and home that a community offers.”
He further said: “Our tenants stay with us for an average of 4.5 years, compared to the industry average of 3.5 years, with almost 45 per cent having lived with us for over six years. Also, we offer residents an opportunity to upgrade their homes, across our portfolio at any time during their contract period without penalties.”
John Stevens, managing director, Asteco, said: “Apartment rental rates continued their downward trajectory, recording average drops of four per cent in the second quarter of 2019, and 11 per cent compared with the same period last year. Villa rents saw similar drops of two per cent quarterly and 10 per cent annually.”
He attributed the downward spiral to challenging market conditions. “It is a trend that is likely to continue in the short-term, predominantly due to oversupply, subdued population growth, global economic uncertainties and bearish market sentiment, among other factors.”
He said on an average, rates have been, and still are, softening by approximately three per cent quarterly and 10 per cent over the year.
Stevens added: “Whilst established areas such as Dubai Marina, JLT [Jumeirah Lakes Towers] and Downtown Dubai continued to be popular for apartment rentals, lower rents along the E311/611 corridor in areas such as JVC [Jumeirah Village Circle], Dubai Sports City and Dubai Silicon Oasis also attracted a fair share of residents.”
As for villas, established communities like The Springs, Arabian Ranches and Jumeirah Park, along with new areas like Damac Hills, Dubai Hills Estates and Mira are faring well. He said: “Tenants are certainly more price-conscious and no longer too fixed on certain locations. Their movement has picked up but is not focused on people moving from old to new Dubai.”
There is also a section of tenants that is shifting to smaller or more affordable units in less popular areas as a result of economic uncertainties, he added.
“Old Dubai (Deira & Bur Dubai) will always appeal to a certain demographic due to affordable rents, convenience and connectivity,” he noted.
EXPO 2020 Dubai
Daswani of Capitol Real Estate said the run-up to Expo 2020 Dubai will see rents stabilising.
He said: “Right now, we are where we were over ten years ago. Rents in some parts of Deira, for example, have plummeted to Dh18,000-Dh20,000 for a studio, just like it was in 2007.
“Expo 2020 is a year away, but we’re already getting enquiries and bookings.”
Daswani said his company has received deposits from clients from India, Pakistan and China for flats in Deira, which will be taken from now till April 2020 for Global Village and from September 2020 in time for Expo 2020 Dubai. “These tenants will be putting up stalls in Global Village and Expo.
“In addition, we are getting clients from Europe wanting to set up offices in Business Bay,” he said. Trends ahead of EXPO 2020
Mubarak identifies the following trends in the run up to EXPO 2020:
Continued focus on customer centricity: Businesses will continue to focus on offering a high level of service and efficient operations to ensure customer satisfaction
Neighbourhood and Community living: “We expect the appetite towards community living to continue during the next year, with residents realising the value that a quality neighbourhood experience offers in terms of amenities, convenience, and social activities.”
Adoption of technology: The role of technology in driving efficiencies and facilitating transactions will continue to grow in the coming months, with residents more and more looking for convenience. “Most recently, Dubai Asset Management announced the rollout of phase one of the first fully digital and paperless property rental experience in partnership with Smart Dubai and launched the DubaiAM Life app that allows residents to raise requests, renew leases and keep track of activities across their community,” he added.
Dos and don’ts to keep in mind while shifting:
■ Consider whether the potential discount is worth it or not in terms of cost and/or hassle. In addition to the time (and often headache), there are a number of costs involved such as agent fees, deposit, reconnection fees, mover charges, etc.
■ Consider renegotiating existing lease.
■ Ensure all documents are in order.
■ Choose a reputable moving company.
■ Know your building/area — is it pet-friendly? What is traffic like, especially during rush hour? Where is the next supermarket, school, hospital, etc? Source: Asteco
What Dubai Land Department’s latest report says:
According to the Dubai Land Department’s Annual Report: Real Estate Sector Performance 2019, the growth in the population and number of employees in Dubai has been reflected in the number of leased units and the number of lease contracts.
The number of newly-leased contracts reached 246,509, while renewed lease contracts reached 251,409 in 2018. From 2013 to 2016, new lease contracts were decreasing steadily against an increase in renewed lease contracts, whereas from 2017 until 2018, the numbers of both new and renewed lease contracts increased. However, the growth rate of new lease contracts was higher than that of renewed lease contracts, which reflects the additional demand on residential and non-residential units in the sector with the price correction in rents in Dubai.
8,000 new units
In terms of real estate project growth, the first five months of 2019 witnessed the launch of 48 new real estate projects comprising residential apartments, villas and villa complexes. Upon completion, they are expected to add approximately 8,000 new residential units with a total area exceeding 730,000 square metres.
Residential apartments represent the largest percentage thereof, compared to retail stores, offices, and other commercial units with 7,537 new residential units with a total area exceeding 668,000 square metres.