Dubai’s tenants are in the mood to upgrade – and this is showing up in residential rents at key locations. With tenants moving to new – more spacious – homes, rents at some of the budget-friendly locations such as Discovery Gardens are coming under further pressure.
In fact, Discovery Gardens has recorded rental declines of 22 per cent in the 12 months to the end of March. Listings show one-bedroom apartments there at just Dh30,000, with some landlords allowing one- or two-month rent-free stays.
Even slightly more upscale surroundings – such as JLT and Dubai Marina – have recorded 16 per cent drops during this period, according to Cushman & Wakefield Core, the property consultancy. This has created opportunities for tenants to take a one-bedroom at a slightly upscale Dubai Marina tower for around the Dh55,000-Dh60,000 mark, while a JLT unit would be under Dh50,000.
“The COVID-19 led tenant migration from apartments to villas are collectively adding further downward pressure on apartment rents,” says the latest Dubai property market update from Cushman & Wakefield Core.
MORE HANDOVERS
Dubai had another 10,500 homes being delivered in the first quarter of 2021, including the UNA apartments in Town Square, Amna Tower in Al Habtoor City, The Address Jumeirah Gate in JBR, Bloom Towers in JVC and multiple deliveries in Dubai Creek Harbour.
The highest number of handovers over Q1 2021 were in Dubailand (Townsquare, Arjan and Akoya Oxygen) followed by Business Bay, Jumeirah Village Circle, Dubai Creek Harbour and Dubai Marina.
It’s different with villas
If the tenant is scouting for a villa, the current situation is that he should be making up his or her mind fast. Especially for those who are aiming for a super-premium address at the Palm or Emirates Hills – both locations have seen rent rises of 10% plus over the last 12 months. The Palm has recorded sales of homes costing Dh100 million plus – but the island’s rental offerings too are not having too much difficulty getting picked up.
These trends confirm what’s been obvious over the last two quarters. Any location or landlord offering spacious surrounds with some green (or sand, in the case of the Palm) is what’s in demand as upgrades gather pace.
Move or stay?
Industry sources agree that selective increases are showing up in Dubai’s rental market, with the Palm as a prime example. The two or three years, when every location in the city was recording rent drops, are at an end.
Whether to renew or move on will depend quite a bit on what landlords are willing to offer. “Most continue to be willing to negotiate lower rents and flexible lease terms upon renewal to retain tenants,” the report adds. “This has led a large section of tenants to remain in their current premises as they have been able to achieve rental savings upon negotiations while avoiding the inconvenience and additional moving costs.
“However, depending upon landlord flexibility, tenants’ working arrangements and financial situation, many have relocated to either achieve more space or considerable savings. We foresee apartment rents to continue softening over the remainder of 2021.”
But 12-month cheque payment options are dropping, with three- or six-cheques the norm. Rent-free periods are still being used by many landlords, especially those with new buildings and apartments to fill. Free chiller is another big plus for tenants who have decided to take up new premises.
So, have you decided to move or stay put?
GO SLOW ON OFFPLAN
The off-plan market "continues to face headwinds", contracting by 29% over Q1-2021 vs Q1-2020, according to Cushman & Wakefield Core.
"Despite heavily incentivised payment plans and lower entry points, buyers continue to prefer ready units to avoid further uncertainty and delays that may be expected from the off-plan market. We foresee this preference for ready stock to continue over the near- to mid-term."
