Landlords lure tenants with gift vouchers
EVERY EFFORT IS BEING MADE TO WIN AND RETAIN TENANTS AS RENTAL PRESSURES CONTINUE TO MOUNT IN DUBAI
Softening demand in Dubai forces them to offer incentives to get tenants to stay on with them while trying to win over new ones |
Is your landlord issuing gift vouchers to you? If not, probably you are not asking forcefully enough. Landlords in Dubai caught with softening demand are offering all sorts of incentives to get tenants staying on with them or in trying to win over new ones. And the incentives will keep on coming as key communities and residential locations across Dubai see more rental corrections.
“The majority of freehold areas in the city have continued to see rental declines month- onmonth since the beginning of this year,” said Lynnette Abad, Head of Property Monitor at Cavendish Maxwell, the consultancy. “Rental deals from both private and corporate landlords have become the normwith free months’ rent, multiple cheques, waived commission and gift vouchers for local stores.
“We have also seen a trend among private landlords where they are becoming more negotiable on rentals compared to the firm stance most took last year. Landlords have come to the realisation that an occupied investment property at a lower yield is better than a non- producing investment property.” For apartments, the best places for potential tenants to look for deals were Barsha Heights ( where rents are down 2.33 per cent since January 1), Jumeirah Village Triangle ( down 1.93 per cent) and Business Bay ( by 1.9 per cent).
In the villa/ town house category, Dubai Silicon Oasis units recorded a 2.97 per cent dip in the first quarter, followed by Falcon City ( by 2.92 per cent) and Damac Hills ( 2.67 per cent), according to Property Monitor rental index. The rental dip pattern is holding up. Over a 12- month time frame, the locations in Dubai where the declines are most apparent are Jumeriah Village Triangle ( lower by 10.64 per cent), Mudon ( by 7.21 per cent), Dubai Silicon Oasis ( 7.29 per cent) and Barsha Heights ( 6.77 per cent).
“The vast amount of new supply entering into themarket has continued to put pressure on rents across most communities,” said Abad. “With the recent supply releases in Town Square, rent contracts for a three- bedroom town house are as low as Dh110,000 per annum. Since the release of Town Square inventory, town house rents have declined further in the Dubailand area.
“Prior to their release, the lowest three- bedroom town house in the Dubailand area was on average Dh135,000. With the handover of town houses in Arabella Phase I in Dubailand, more releases at Town Square, and Mira Oasis scheduled to hand over in the third quarter of 2018, it is likely that town house rents will continue to decline in this area throughout the year.”
Pressure
The areas where rents have dropped by more than 5 per cent in the 12 months ending March 31, 2018 are Business Bay, Discovery Gardens, International City, Jumeirah Golf Estates, The Springs andAl FurjanVillas.
“The pressure on housing allowances has also impacted rental market performance and the pool of tenants at the higher end of the spectrum continues to shrink,” says the new Cavendish Maxwell. “It has been a tenant- led market and the increasing stock levels each quarter have provided ample opportunities for negotiation on base rents as well as payment terms such as number of cheques.
“Declines will be more pronounced in areas with increasing supply and those located away from central business districts and public infrastructure.” Dubai’s estate agents seem to be in broad consensus on what could be store for rents in the next few months. More than 70 per cent reckon declines will continue by up to 5 per cent or more during the third quarter. ( No one believes rents are bound to increase by more than 5 per cent, though just over 4 per cent suggest they may go up by up to 5 per cent. But the ranks of such believers are very much the minority.) What of demand patterns for buying right now?
“Trading prices for apartments continue to shift towards the lower end of the price band, averaging Dh1.2 million in the first quarter of 2018,” the report adds. “The mid- income population ( in the Dh15,000Dh25,000 amonth bracket) has been the key target segment for themajority of affordable housing apartment launches by developers in recentmonths.
“The majority of this newinventory offers smaller unit sizes to keep prices attractive, along with providing incentives, such as Dubai Land Department fee waivers and payment plans with limited commitment ( 2030 per cent) during pre- construction period and extended post- handover payment options.”