Khaleej Times takes a closer look into real estate trends, moving costs and recent consumer habits in the UAE.
Falling rents in the UAE are a good reason to move into a brand-new apartment or villa in a desirable location. However, independent studies and reactions from real estate companies, property builders and families say another story.
While some residents are flexing their bargaining powers to negotiate a rent decrease in their current apartment, some are waiting for ‘rents to fall further’. Some Sharjah residents are making a beeline to Dubai, to take advantage of the falling rents in certain localities. ‘Anything to escape the Sharjah-Dubai traffic,’ said one resident.
However, a vast majority of residents prefer not to move at all, fearing very high moving costs. Including Dubai Real Estate Regulatory Agency (RERA) charges, advance rent, municipality charges, movers’ costs, and several other hidden costs.
Residents said they need to keep aside a minimum of Dh30,000 or more, depending on the apartment rent and not accounting for hidden charges, to move into a new place. Khaleej Times takes a closer look into real estate trends, moving costs and recent consumer habits in the UAE over the subject of moving into the ‘dream home’.
Will rents drop further?
Steven Morgan, CEO Middle East of Savills, a global real estate services provider, said:
“Dubai’s residential real estate market was firmly in a correction phase during 2018. A slowdown in global trade and financial markets also weighed down on demand.”
He added: “On the other hand, demand for ready-to-move properties increased due to the spike in project completions over the last 12 months. Developers offered generous post-handover payment plans and other incentives such as partial or full waiver of associated fees to spur interest across completed properties.”
Garbis Iradian, chief economist, Mena, International Institute of Finance, told Khaleej Times in an earlier interview: “We expect residential rent declines to continue, albeit at a slower pace, as job growth remains low and new housing becomes available. The continued decline in rents is associated with the downward trend in residential prices that started in mid-2014.”
Property Finder said in a report last year that the residential property prices in Dubai will continue their decline in 2019 due to increased supply entering the market.
Tenant bargaining power
Rents in Sharjah can be hiked only once in three years, and the availability of supply and competitive rents in Dubai led to a widespread decline in apartment rents in Sharjah in the fourth quarter of 2017, according to Dubizzle Property.
Butaina area experienced the biggest drop in rents (17 per cent), followed by Al Nabba (10 per cent), Al Nahda, Al Qasimia and Al Ghuwair (nine per cent). Three-bedroom apartments for rent in Butaina experienced the largest decrease in rents by – 44 per cent.
“They could be rented for Dh27,000 in the fourth quarter compared to Dh48,000 in the same period in 2016. This may be because of older buildings in the area,” said Samer Abdin, general manager, Dubizzle Property.
But does that mean people are moving to Dubai? Mohan Kumar, a Sharjah-based insurance company employee, has been living in an apartment complex in Al Qasimia for over 10 years. When he first moved into the three-bedroom flat in 2008, the rent was Dh40,000. Today, he pays Dh33,000 for the same apartment, and the landlord has thrown a free parking facility into the mix.
“I moved here when my kids were much younger so that we could be closer to their schools. Now, they have graduated and are in university. However, when I think of the additional cost I need to shell out to move into a new place, I decide not to do,” added Kumar. However, he said that the stress of being stuck in traffic every morning makes him reconsider his decision at times. “For my kids, this locality is home,” he added.
“With the UAE real estate becoming more affordable, property-seekers and tenants have more bargaining power to ensure they are getting an accurate market price for their properties,” added Abdin. In a poll of over 1,400 people on the dubizzle platform in November 2018, over 900 users said they were currently renting property in the UAE.
Among those renting properties, 18 per cent said they negotiated a decrease of more than 15 per cent on their annual rent in the last year, with seven per cent negotiating a 10-15 per cent decrease, 18 per cent negotiating a 5-10 per cent decrease, and 19 per cent negotiating a decrease of less than five per cent. About 19 per cent of respondents cited reducing the number of rental cheques as a tool for negotiation, while 14 per cent said maintenance and chiller fees were put forward for negotiation.
Farhad Azizi, chief executive officer, Azizi Developments, told Khaleej Times: “There are many areas in Dubai that are growing in popularity, the most important of which is Meydan. Meydan is not only close to various business centres and a host to some of the world’s most prominent equestrian events, but will also be home to the largest mall in Dubai with its outstanding leisure, entertainment, and sporting options.”
Another upcoming prime location in the Emirate is Dubai Healthcare City, which is in proximity to Dubai International Airport and to Downtown Dubai as well as various business hubs. “Last but not least, Al Furjan is an upcoming area that is close to the Expo 2020 site, Ibn Battuta mall, JBR, and Dubai Marina. It will also have a metro line that will soon be completed,” added Azizi.
Source |: Khaleejtimes.com