Tenants In Dubai Get More Bargaining Room

Rental markets are continuing to move from an owners' to a tenants' market with tenants enjoying more room to bargain as prices continue to fall. As the supply in the residential sector nears its peak, rentals continued to decline in the second quarter of this year, particularly for luxury and high-end villas and apartments. "Rents have fallen the most in the upmarket areas such as Downtown and Marina. There's been a bit of movement of people shopping around for a good price as they look to save money," Craig Plumb, head of research for the MENA region at Jones Lang Lasalle, told Gulf News. According to Jones Lang Lasalle's recent report, average apartment rents saw a year-on-year decrease of 10 per cent and 4 per cent quarter on quarter with the greatest decline in the high-end sector. Average villa rents year on year fell about 23 per cent and 11 per cent quarter on quarter with the greatest decline also seen in the high- end sector. The continued rental decline is attached to the overall economic situation.

The amount people are willing to pay for rent is directly connected to their jobs and salaries. People are getting what they can afford," Laura Martoramo, CEO of Leo Sterling, told Gulf News. According to Martoramo, landlords are continuing to offer more attractive terms such as payment by more cheques to attract customers. Another trend is the shift of residents from Sharjah to affordable housing in Dubai. "Lots of families are moving back to Dubai as rents are becoming more attractive and also it makes more sense to live and work in close proximity," said Elaine Jones, Chief Executive of Asteco, in a previous interview with Gulf News. The report said 26,000 units are expected to be completed in 2010 followed by about 25,000 in 2011, bringing the total residential stocks to approximately 320,000 by the end of 2011. Unlike the previous two years, which saw many projects either delayed or cancelled, the projects due to come on stream this year are not hindered by delays. Sale prices on the other hand remained steady in the last quarter.

The number of residential transactions increased by 49 per cent over the last quarter but this has decreased by 35 per cent over a one-year period. According to Plumb, the differences in sale prices are project specific. "A reason why sale prices have reached the bottom at the moment is because there has been a lot of sales activity. However, the increased sales transactions of 50 per cent doesn't actually represent the sales activity, it could just be a result of the Land Department putting more pressure on developers to register transactions," said Plumb. According to experts, finance is a key factor in market recovery. The residential market has shown signs of improved lending in 2010 as more banks are injecting liquidity into the mortgage market. "More mortgage finance is being made available which is evident through the increasing number of mortgage-financed transactions," said Plumb.