It is no secret that the local real estate market has seen a steady decline since the drop in oil prices beginning in 2014. This coupled with the growing oversupply issue has resulted in consistent falling prices for several years. A report by real estate advisors JLL stated more than 12,000 units were handed over in the first quarter of this year, one factor contributing to average sales prices dropping by 7% year on year.
Additionally, COVID-19 has caused increased uncertainty within the community. For example, a potential exodus of many expatriates who call the UAE home may further affect the already dented real estate industry. With many people leaving the country comes several landlords facing the issue of having vacant apartments. Those who are staying may have had to take salary cuts or have had their lifestyle affected due to the global pandemic. In line with this, we have seen shifting demand across the rental scene. Several of these factors have contributed to many describing the current real estate situation as a “renters market”. This is exhibited in numerous ways.
The obvious trend is the decrease in rental prices across the entire market. For example, the average rent in Jumeirah Village Triangle dropped a staggering 9.12% throughout the last month according to Property Monitor data. Prices in the Dubai Marina continued on the downward trend, and Barsha Heights followed suit, where rental prices saw a fall of 7.86%. Now, what does this mean for the tenant? If you are looking to move, be wary of the trends. Although rents are falling on mass, certain areas are becoming cheaper at a far faster rate than others. This means it is imperative to keep in the loop as there may be a good bargain for you on the horizon in an area you hadn’t previously considered. An example of this in JVC is a studio one-bedroom apartment for a potentially negotiable AED 24,999 annually. Significantly cheaper than in past months.
One way to assess these areas is to check through the reviews on Mintaga where you can gather an invaluable unbiased insight into living in different communities across the UAE and gauge which one is right for you.
Similarly, if your lease is up for renewal and you plan on extending it be sure to keep up to date with market figures and data, which is easy to do through a property portal like Property Finder. The landlord must match the rents displayed on these portals and indexes and it is not uncommon for a tenant to receive 30 - 60 days free rent in line with falling prices, especially if the relationship has been good. Be advised that there is a 5-7% flexibility on the prices displayed on property portals, so do not compare your rent with the cheapest on the portal, this will be a common argument when negotiating future rent. The main aim for landlords at the minute is to maintain tenants and not be left with vacancies in a time of uncertainty. Arguably this gives tenants more bargaining power than in the past.
Another reason UAE tenants have more negotiating power is that UAE banks are deferring mortgage payments for landlords. This means landlords have the opportunity to be more flexible given the new circumstances.
Overall the UAE property market is being affected by the global pandemic like anywhere else in the world. Despite this the majority expatriate nature of the country leaves the real estate market in a more delicate situation with a seemingly likely mass exodus of expatriates over the coming months. As always monitor the past changes in rental prices on Property Finder and keep in touch with predicted trends if you are considering moving. Furthermore when moving always check what previous and current tenants have to say through their reviews on www.mintaga.com to ensure you are making the right move.