Revealed: Where rents are falling in Dubai
Rents in Dubai drop over 20%, led by Sports City, Dubailand.
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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