Rents in Dubai dropped to 21 percent in the third quarter of 2020 as the downturn in income forced a major movement in the rental market.
Property consultants say that as a result of the heavy movement of tenants, landlords are becoming more flexible, willing to negotiate lower rents and flexible lease terms on renewal to retain tenants.
“This has resulted in many tenants staying in their current places of work as they have been able to achieve rental savings on negotiations while avoiding uncertainty and additional transportation costs,” said Parathiusha Ghorabo, Head of Research and Consulting at Core.
Rents in Dubai Sports City decreased by 20 per cent in the third quarter, the highest rate, followed by Dubailand (18 per cent), The Greens and The Views (15 per cent), and Jumeirah Lake Towers (14 per cent).
Among the villa complexes, Reem Mira and The Villa in Dubailand (21%) saw the largest declines year on year, followed by The Springs and Meadows (13%) and Jumeirah Village Circle (12%).
However, depending on the resilience of the owner and the financial capacity of the tenants, many of them have moved on to achieve substantial savings as rents have decreased significantly over the past 12 to 24 months, with a particularly sharp decline over the past few months. Tenants can now find newer building and sometimes larger units with similar or lower rents than they were previously paying.
“With household income expected to remain under pressure, we expect relocations to continue with the majority of tenants remaining price sensitive,” said Gurabo.
She added that some renters, on the other hand, have downgraded or moved to offshore locations that have seen new inventory deliveries such as Jumeirah Village Circle, Dubai Sports City and projects in Dubailand for significant savings as tenants are looking to manage finances in the background. Salary cuts are widespread.
“For expatriate tenants already residing in Dubai, many negotiated a rent reduction and others decided to buy their first home due to the loan-to-value increase. On the other hand, some renters have moved to larger properties due to a shortage,” said Louis Alsopp, Allsopp & Allsopp CEO. Space in their current property during closure. "
In recent months, Allsopp said, fewer expatriates have moved to Dubai, and hence, a decrease in rental transactions has become apparent.
He added, "I expect this to change as we approach the fourth quarter and more, as we enter the year 2021 as job losses around the world have an impact and may encourage more people to come to the emirate for various job opportunities."