Too much supplies over the past 24 months mean that tenants face a lot of options.
Residential rents fell across the board in 2020 with the biggest sharp falls in Dubailand and Dubai Sports City.
According to market experts, the cheapest areas currently for rent are International City, Dubai Production City (IMPZ), some projects in Dubai South, Dubailand (Queue Point and Town Square), and Jumeirah Village Circle (JVC).
In general, villas and homes were relatively better off apartments as tenants looked to increase their size. More indoor and outdoor spaces are needed now, after a long period of restraint at home.
Prathyusha Gurrapu, Head of Research and Consulting, CORE explains: “Average apartment rents decreased by 10 percent year on year (June 2019 versus June 2020) and 6 percent from the beginning of this year (January 2020 vs. June 2020). Decreased Average villa rents are 9 percent year on year (June 2019 vs. June 2020) and 5 percent from the beginning of this year (January 2020 vs. June 2020). ”
While the Covid-19 pandemic has created an environment of uncertainty, it is said that areas with higher supplies have been hardest hit by falling rents during the past 12 months.
"Areas such as Business Bay and the Jumeirah Village Triangle (JVT), which have high levels of supply, have seen their rents drop by more than 10 percent in the past year," said Richard Wind, Group General Manager, Petromhomes.
He added: "During the closing period, the rental activity in Pommes decreased by almost 70 percent, with only an urgent need to move to find a digital property and move through the permit scheme.
Since the close, rental activity has recovered to pre-Covid levels, with two major drivers for tenants to move during the last period. The search for greater value and desire for more space has been ".
Experts also note that a lot of supplies over the past 24 months mean that tenants face a lot of options. Therefore, many are leading a tough deal with landlords to get the best deal.
Louis Alsop, CEO of Allsopp & Allsopp, said: “During the past three months, prices have decreased slightly. However, there is a flow of tenants registering their interest in real estate in the market.
We are seeing more landlords accepting multiple check payments with 3-6 checks now becoming the norm, and in many cases, landlords accept 12 check batches.
However, real estate experts agree that the decrease in rents has been somewhat stopped due to the low number of properties that have entered the market in recent months.
Craig Salmons, Managing Director of HMS Homes, said: “It is surprising that we thought prices would continue to decline, especially during the global epidemic. However, this was not necessarily the case. Most rents have been largely consistent due to the low amount of real estate entering the market. Most of the properties we expected to be available during April, May and June have decreased dramatically due to the renewal or extension of many tenants. This means that at present there are more people searching for properties than we have available for rent.
"In certain areas, such as Jumeirah Park and the Palm, we were even able to get a premium on certain types of properties due to the lack of options available."
Consequently, the cost of living in Dubai is set to become more affordable with lower rents across the spectrum. This, in turn, will enable local companies in the Emirates to be more competitive.