KHALEEJ TIMES, Tuesday, Oct 13, 2020 | Safar 26, 1442
Where rents are falling in Dubai
Emirates:
Rents in Dubai have fallen as low as 21 per cent in the third quarter
2020 as contraction in income forces considerable movement in the rental
market.
Real estate consultants say that as a result of heavy movement of tenants,
landlords have been more flexible, willing to negotiate lower rents and flexible
lease terms upon renewals to retain tenants.
"This has led many tenants to remain in their current premises as they have been
able to achieve rental savings upon negotiations while avoiding uncertainty and
additional moving costs," said Prathyusha Gurrapu, head of research and advisory
at Core.
Rents in Dubai Sports City dropped 20 per cent in Q3, the highest, followed by
Dubailand (18 per cent), The Greens and The Views (15 per cent), and Jumeirah
Lake Towers (14 per cent). Among villa communities, the sharpest year-on-year
declines were witnessed in Reem-Mira and The Villa in Dubailand (21 per cent)
followed by The Springs and The Meadows (13 per cent) and Jumeirah Village
Circle (12 per cent).
However, depending upon landlord flexibility and a tenants' financial
capability, many have relocated to achieve significant savings as rents have
softened markedly over the last 12 to 24 months, with a particularly sharp drop
seen over the last few months. Tenants can now find newer build and occasionally
bigger units at similar or lower rents than what they were previously paying.
"With household incomes expected to remain under pressure, we foresee
relocations to continue with a majority of tenants remaining price sensitive,"
said Gurrapu.
She added that some tenants, on the other hand, have downgraded or moved to
outward locations which have seen new stock deliveries such as Jumeriah Village
Circle, Dubai Sports City and projects in Dubailand to achieve major savings as
tenants look to manage finances in the backdrop of widespread salary reductions.
However, Allsopp & Allsopp said travel restrictions and Covid-19 is having an
impact on letting transactions.
"For expat tenants already residing in Dubai, many have negotiated reductions in
rent and other have decided to buy their first home prompted by the
loan-to-value increase. On the other hand, some tenants have moved to bigger
properties prompted by the lack of space in their current property during
lockdown," said Lewis Allsopp, Chief Executive Officer of Allsopp & Allsopp.
Allsopp said in recent months, fewer expats have been making the move to Dubai
and therefore, a drop in rental transactions has become apparent.
"I predict that this will change as we go into Q4 and even more so, as we enter
2021 as job losses worldwide make an impact and may encourage more people to the
emirate for different work opportunities," he added.
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