DXB News – Page 2 – Phoenix Homes Real Estate

January 26, 2024in DXB News

In Dubai property, offplan prices are rising much faster than ready homes – what should buyers do?

Dubai: Scouting for a property to buy in Dubai? If you are thinking that buying a ready home will turn out to be costlier, check out the data from the first six months of this year. Because offplan sales are having a good year – and at higher prices too.

Average prices for one-bed offplan apartments launched during this period are higher by a whopping 46 per cent from a year ago, at Dh1.2 million. A ready apartment saw only a 14 per cent increase at Dh1.1 million, according to data from DXBInteract.com.

Posher areas, higher asking rates

One reason for the near 50 per cent increase in offplan proce tags could be because the recent wave of launches have taken place in Downtown Dubai, Jumeirah, Al Wasl, Safa Park, and the Dubai Water Canal. Also, developers are adding more features – such as individual pools attached to apartments rather than a common one for the building, premium fitness facilities, etc. – to make their offplans stand out from the rest.

For end-user buyers, the surge in offplan launch prices will be a bit of concern, more so as mortgage rates are also on the march. And there will be another rate hike this month, making the cost of buying an offplan unit on mortgage far expensive than at any point since 2019-20.

The rate hikes have already managed to depress mortgage-backed buys. In first-half 2022, mortgage transactions ‘slumped’ 37 per cent in value to Dh43.4 billion and 15 per cent in volume to 11,280 homes, the DXBInteract.com report says.

“For end-users, developers will need to start offering more incentives, and not just low down payments,” said an estate agent. “With investor-buyers, the main attraction would be the UAE Golden Visa – and its 10-year residency – for property values of Dh2 million and over.”

Just recently, Samana Developers said it’s offering ‘free’ golden visas for any buyer picking up a Dh2 million or over home at any of its projects. Or with a combined value that exceeds the Dh2 million. “We have seen around 35-40 per cent of buyers merging two properties to reach the Dh2 million threshold to qualify for the Golden Visa,” said Imran Farooq, CEO of Samana. (According to the developer, the authorities will start issuing these visas from September. Earlier, a buyer had to have Dh10 million worth of property to qualify.)

DH115B WORTH OF H1 SALES

There was a 60% increase in sales to 43,000 properties in the first-half of 2022, for a combined value of Dh115 billion. That’s an 87% increase over the same period last year.

In full offplan mode

With villas, ready properties are still lording it over apartments on prices. An average ready villa price was at Dh2.6 million, up 6 per cent, in the first-half of this year, while an offplan was at Dh1.7 million, a gain of 9.6 per cent from a year ago. Incidentally, sales of ready villas were down 20 per cent during this period. (In Dubai’s Dh100 million and over villa/mansion space, there is no such thing as a slowdown happening.)

Developers in Dubai are keeping the offplan pipeline running hot, with a 130 per cent rise in launches totalling 130,000 units from 67 projects in these last six months. There were a further 17 projects announced but without details on the available units, according to DXBInteract.com.

“Genuine demand is driving Dubai’s property value gains – from relocations, from investors eyeing opportunities ahead of the FIFA World Cup in Doha, and global investors seeking a safe haven,” said the estate agent.

Source: https://gulfnews.com/business/property/in-dubai-property-offplan-prices-are-rising-much-faster-than-ready-homes—what-should-buyers-do-1.1657253230788

January 26, 2024in DXB News

Myles Bush Sell Largest Ticket Villa in Emirates Hills

Award-winning real estate brokers today announced that it has brokered the largest villa sale in Emirates Hills in the past six months.

The property, which sold for AED 41,195,000 earlier this month, represents the third highest real estate transaction in Dubai over the same time period.

Exclusively listed, the luxurious villa is over 2,000 square metres and sits atop 3,237 square metres of expertly landscaped property. Purchased by an Indian business man, the villa’s new owner hails from Morocco.

Myles Bush, former CEO of PHReal Estate feels that these kinds of high-end transactions show confidence in Dubai’s real estate market. “PHReal Estate are delighted to once again have solidified such a high-profile transaction,” he said.

“Selling villas valued at over USD 10 million right now is a wonderful indication of a market on the up!”

PH Real Estate has a proven track record of successfully brokering some of the most prestigious real estate deals in Dubai since its inception in 2007.

Earlier this month the firm was awarded Dubizzle’s Top Quality Driven Agency award by leading online property sales and rental platform Dubizzle.com.

Emirates Hills, a luxury gated community developed by Emaar Properties, is a hot spot for Dubai’s most elite residents.

Home to some of the most wealthy individuals in Dubai, Emirates Hills boasts private parks, tranquil walking paths and the world-class 18-hole Montgomerie Championship Golf Course.

Source: https://www.cbnme.com/news/ph-real-estate-brokers-sell-largest-ticket-villa-in-emirates-hills/

January 26, 2024in DXB News

Dubai real estate market transactions hit $6.9 billion in June, highest sales figures in last 13 years

The Dubai real estate market recorded AED 22.7 billion sales in June – highest sales figures in the last 13 years – and reaching almost 71 percent of the total 2021 sales volume, Dubai Land Development (DLD) data revealed.

The June transaction figures are 32.88 percent higher in volumes and 24.21 percent in value terms on a sequential basis, compared to May 2022.

For the April-June quarter, Dubai’s property market transactions amounted to AED 59.29 billion, up by 6.81 percent compared to Q1 2022.

Last month’s property transaction figures were 41.23 percent higher in sales volume and 54.9 percent up in value terms to June 2021

According to data released by real estate consultancy Allsopp & Allsopp, the top three areas for June sales were Dubai Marina, Jumeirah Golf Estates and Downtown Dubai.

In Downtown Marina, the average sales price for June was AED 1.945 million, while it was AED 6.46 million in Jumeirah Golf Estates and AED 1.4 million in Downtown Dubai.

The top three seller nationalities in June, according to Allsopp & Allsopp, were British, Indian and Canadian, while the top three buyer nationalities in June were British, Indian and French.

Prior to this, June 2009 recorded the highest in terms of both real estate sales volume and value in Dubai.

As per the data, 60.45 percent of the transactions were in the secondary market and 39.55 percent in the off-plan market in June this year.

Lynnette Sacchetto, director of data and digital transformation at Allsopp & Allsopp said the Dubai real estate market has not disappointed this year with consistent growth month-on-month and quarter-on-quarter, despite global and local macroeconomic conditions.

“It is July and we have already reached 70.8 percent of total sales volume of 2021, which is significant to note. And I do not foresee these trends slowing down or shifting anytime soon,” Sacchetto said.

Allsopp & Allsopp also reported a 25 percent increase in rental contracts in the April-June period this year from Q1 of 2022.

The top three areas for rentals were Dubai Marina, Downtown Dubai and Dubai Hills Estate and the top three nationalities for tenants were British, Russian and Indian in June this year.

In Dubai Marina, Allsopp & Allsopp average rental in June was AED 132,771, while that in Downtown Dubai was AED 130,455 and Dubai Hills Estate AED 144,955.

DLD data for June showed Dubai recorded 8,838 total number of real estate transactions.

Source: https://www.arabianbusiness.com/money/wealth/money-wealth-real-estate/dubai-real-estate-market-records-6-9-billion-in-june-highest-sales-figures-in-last-13-years

January 26, 2024in DXB News

Millennials warm up to buying property in Dubai

They believe long-term investment benefits will outweigh the risks

Millennials in Dubai (aged between 25 to 37 years on average) are slowly stepping on to the property bandwagon, owing to attractive payment schemes and reduced housing prices. Up until a few years ago, the high barriers to entry in the UAE property market made most millennials resort to renting instead of owning a home. Those that are settled and secure in their jobs, maybe with a spouse who will help shoulder the costs, are turning their minds towards buying. However, they still make up only a small number in the total tally of property purchasers.

Lewis Allsopp, CEO of Allsopp & Allsopp, attributes this to two reasons – affordability and mentality.

“On affordability, there are high obstacles to entry into the market, namely the size of the deposit that will be required and the fees involved. A buyer needs at least 32 per cent of the property value. When you take into account a person’s current rent, as well as living costs, to save 32 per cent of a property value is an extremely tall order,” he explains.

Referring to mentality, Allsopp says young people want to travel the world, nice cars, holidays, material possessions and experience the best of life. “If you drill down to Dubai, you have the added thought process that people don’t know how long they will be here. If they don’t feel secure in their job, they are not going to buy a property,” he reckons.

Being first time home buyers, millennials typically have lower budgets of between Dh1 million and Dh3 million.

“In Dubai, younger people previously hesitated to purchase properties because of the challenge of affordability and larger down payments. Dubai is providing ever more opportunities for this age group and buying a home is increasingly being seen as a great investment among the 27 to 35-year-old expats who had perhaps previously considered the risks to outweigh the long-term investment benefits,” observes Rory Brown, senior client manager and Arabian Ranches specialist at Espace Real Estate.

Of the millennials that are buying property, most are doing so for their own use. Although they may buy to lease and get an income, they still have to pay rent somewhere else, which can be unviable.

“Millennials entering the property market typically want to secure a home before they look at investment properties. The reality is that they need a roof over their heads before trying their hand in the investment world,” reckons Myles Bush, former CEO of PH Real Estate.

“If they are intending to settle in the region for a number of years, set up home here and start to raise a family, it makes sense to put their money into their own asset, paying off their own mortgage rather than someone else’s via renting. This age group often have enough money set aside for a good deposit and once you have this, your mortgage payments can quite often be less than what you might be spending on rent,” adds Brown.

Buyers in their 20s prefer to invest in apartments while millennials in their 30s are considering villa communities as they start to think about raising a family.

Smaller families with budget limitations are looking at smaller units, perhaps 1-bed or 2-bed apartments. Location is also key for millennials. Therefore, areas with good facilities and good accessibility are key. A good local gym, a super market and easy access to the major highways are always desired.

“Due to their age, they typically prefer a more modern design. Floor-to-ceiling windows, chrome fittings and sharp lines are the current fad. Jumeirah Lakes Towers, Dubai Marina and The Greens are on top of their priority list,” informs Bush.

“Additionally, we are seeing buyers choosing locations where their ‘millennial companions’ are also investing. The developer quality is now taken into consideration. Perhaps potential buyers have seen their friend’s fingers being burnt and while they are now seeing the benefits of investing in the property market, they want to protect themselves by investing with the more credible, larger developers,” continues Brown.

Owing to their budget constraints, millennial buyers usually opt for affordable properties with special offers on payment plans and fee waivers. Developers are also customising their products by offering more attractive payment plans and flexible deposits to entice new buyers. More incentives such as free service fees for up to three years, interest-free bank payments of up to five years, discounts on Dubai Land Department fees and full payment up to five years after handover, are being offered.

“Millennials will look to off-plan if the terms suit them better. Owing to the high cost of entry, these properties suit the millennial buyer perfectly,” says Allsopp.

“Many off-plan projects are promising to complete in short time periods, and if the developers behind the projects are well-known established brands, the new buyers feel confident the developer will deliver and they will get a return on investment,” concludes Brown.

Source: https://www.khaleejtimes.com/business/real-estate/millennials-warm-up-to-buying-realty-in-dubai

January 26, 2024in DXB News

UAE: Golden visa driving foreign investment in Dubai real estate sector

The latest visa reforms have gained the attention of foreign investors, Indians in particular, who have shown keen interest in making Dubai their primary destination

The 10-year residency program, Golden Visa, has generated strong interest among foreign investors to buy property in Dubai, which has emerged as one of the most popular investment destinations in the world.

Zoom Property Insights said Dubai is expected to attract a significant share of the global citizenship-by-investment market, which is expected to grow five times to $100 billion by 2025. The emirate has introduced visa reforms at a suitable time and will attract significant investment in the property sector through golden and silver visas.

The recent relaxations in the investor visa regulations have also helped the cause as it has resulted in higher investment in Dubai from investors belonging to different countries, with Indians leading the pack. Some of the leading real estate developers are now offering Golden Visa to those who are willing to invest no less than Dh2 million in Dubai’s property sector.

Indians, in particular, have shown keen interest in the emirate’s rising popular market due to the golden visa, along with Dubai’s strong economy, infrastructure, expatriate-friendly policies, and safe environment, according to the Zoom Property Insights.

Ata Shobeiry, CEO at Zoom Property, believes the perks of the golden visa have proven to be a catalyst in bringing foreign investment to Dubai.

“The golden visa of the UAE brings along several benefits with it. The fact that it’s a self-sponsored visa that comes without any limitations pertaining to moving in and out of the region makes it feasible for property investors. I believe with relaxed regulations, there will be more people getting this visa and foraying into the Dubai property market,” he said.

The UAE golden visa has now been issued to more than 65,000 individuals belonging to different sectors such as entrepreneurship, science, and healthcare, to name a few, since its initial introduction in 2019.

Indians top property buyers

The Dubai real estate sector is now considered the largest offshore investment market globally, with $146 billion in foreign wealth. This makes it double the size of the London property market vis-à-vis wealth invested by foreigners.

Indians lead the list of top property buyers in Dubai, followed by the UK, Italy, and Russian nationals. Investors belonging to France, Canada, UAE, Pakistan, and Egypt have also made significant investments in the Dubai property market, according to the Zoom Property Insights.

“Dubai’s property market is already witnessing a steady influx of HNWIs and multi-millionaires belonging to different regions. With more investors entering the market, the impact will extend beyond the real estate sector, with tourism, business, and hospitality getting the most benefits,” Shobeiry said.

Key takeaways

• The UAE golden visa continues to capture the interest of foreign investors for investment in the property sector

• Dubai is expected to attract a major share of the global citizenship-by-investment market, which is expected to grow five times to $100 billion by 2025

• Recent changes to the investor’s visa regulations are also resulting in the influx of foreign investors

• The Dubai property market has now become the largest offshore investment market globally

• Indians lead the list of top property buyers in Dubai, followed by the UK, Italy, and Russian nationals

• Investors belonging to France, Canada, UAE, Pakistan, and Egypt have also made significant investments in Dubai’s real estate sector

Source: https://www.khaleejtimes.com/business/uae-golden-visa-driving-foreign-investment-in-dubai-real-estate-sector

January 26, 2024in DXB News

What are the UAE’s foreign investors looking for?

As much as Dh30 billion of the Dh162 billion invested in Dubai real estate in the first half of the year came from overseas investors, statistics from the Dubai Land Department (DLD) show. But what are these foreign investors prioritising when searching for property to invest in Dubai? To be sure, location remains a key factor in their decision, so Dubai’s popular communities are top on a foreign investor’s list.

“They tend to buy properties in the favoured and iconic areas to attract tenants and high rental yields,” Lewis Allsopp, CEO of Allsopp & Allsopp, tells Property Weekly. “Views from the property can be enticing to investment buyers who are looking for prime real estate. A property with a Burj Khalifa view, for example, is always highly sought after.”

Other buyers will base their investment on improving infrastructure, such as an expanding tram line and proximity to the Al Maktoum International Airport, he adds.

An increasing number of overseas buyers are also searching for holiday homes as Dubai increasingly becomes a tourist haven, yet these buyers are also looking at yields and returns, Myles Bush, former CEO of PH Real Estate, tells Property Weekly.

“Cash deposits sitting in European banks are returning tiny interest levels, while real estate in Dubai can allow investors to enjoy 9-10 per cent rental yields,” says Bush.

Types of investors

Laura Adams, cofounder and managing director of Carlton Real Estate, notes that most investors are looking for good payment plans and zero DLD charges in prominent developed communities and from reputable developers. When it comes to completed properties, many are looking for an 8 per cent return on residential units and 10-11 per cent on commercial units, she says.

And while factors such as location, infrastructure, accessibility to amenities and proximity to transportation links are all important for foreign investors, some have specific preferences.

According to Abdul Kadir Faizal, cofounder of real estate crowdfunding platform Smart Crowd, there are three types of foreign investors: those looking for high rental yield, lately of 8 per cent and above, those focused on long-term capital appreciation and those looking to settle in Dubai. Investors looking at high rental yields usually go for smaller unit types, preferable at a lower entry point. These properties also tend to have better transport connectivity within a developed community, which supports mid to long-term occupancy, says David Abood, partner at Core Savills.

While some investors look solely for rental yield and want immediate returns, Allsopp says most of his investor-clients look for capital appreciation and a long-term investment. “It’s very difficult to predict a property market over three to four years, however, it’s much easier to predict that over 10 to 15 years property markets will appreciate,” notes Allsopp.

For investors looking to settle in Dubai, they are more willing to pay a higher premium for better views — buying a house is more of an emotional decision to them, according to Faizal. Such investors are willing to wait for a longer completion date as they don’t have an urgent need to relocate. “That is why the recent decision to introduce a five-year visa for expat retirees is great for the property market,” says Faizal.

Iconic projects

Allsopp asserts that overseas buyers are attracted to much talked-about areas such as Downtown Dubai, Bluewaters Island, Dubai Marina and the Palm Jumeirah. “Investment buyers want properties that look onto the tallest building in the world, are on a man-made island and in locations well-known internationally,” he says. At the same time, there’s a growing demand for projects in urban waterfront areas, especially with the rapid construction and the new launches in Business Bay and along the Dubai Water Canal, according to Haseeb Mirza, data specialist at Reidin.

He says that relatively new locations such as Dubai Creek, Mohammad Bin Rashid (MBR) City and Dubailand have seen the greatest number of off-plan transactions in recent months.

Whereas Dubai Marina, International City and Dubailand have seen the largest volume of transactions in the ready market — mostly apartments offering average rental yields of around 7 per cent, Mirza reveals.

Meanwhile, an increasing number of European buyers from colder climates are opting for waterfront properties, with Palm Jumeirah being a long-time favourite. “Here, overseas buyers can find beautiful ocean views and access from Dh1 million for a smaller studio all the way to a sprawling seven-bedroom mansion for Dh70 million and beyond,” says Bush.

There’s also a preference among foreign investors for established developers. Such developers have more flexibility in providing incentives such post-payment plans and waiver of DLD registration fees, which many private developers cannot afford to do, says Bush.

Who’s buying?

There has been a recent upsurge in Chinese, Indian and UK investors, says Faizal. “The reason for this is due to Dubai being 25 per cent more affordable compared to similar options in their home countries.”

Ellington has observed this trend, reporting that Chinese customers are now among its top five customers. Since 2016, the Dubai-based developer has seen a 150 per cent increase in sales to Chinese buyers, prompting it to launch a platform in Mandarin and hire a Mandarin-speaking team.

Developers are also taking note of the trend. “Over the past two years, Chinese buyers have consistently ranked among Dubai Properties’ top 10 buyer nationalities in terms of value,” says Marwan Al Kindi, Dubai Properties’ director of sales, in a statement. “However, as recently as April, they were in the top five, so there is a clear trend for us to capitalise on.”

One of the biggest Chinese real estate investments in Dubai was announced in June by Fidu Properties, which revealed plans to invest Dh2 billion by the end of the year. The company has already signed deals worth Dh380 million with Emaar for residential and commercial spaces at the The Grand at Dubai Creek Harbour.

Source: https://gulfnews.com/business/property/what-are-the-uaes-foreign-investors-looking-for-1.2290589

January 26, 2024in DXB News

PHOENIX HOMES TAKES FLAGSHIP OFFICE READY FOR 2023 GROWTH

Leading real estate market disruptor, Phoenix Homes is beginning 2023 with a bold move to a 4,000 square feet office space in Barsha Heights’ I-Rise Tower.

The boutique real estate brokerage launched by local real estate veterans Myles Bush, Padraic Hickey and Martin Hyre in 2021 began with aggressive growth plans and a market-disrupting 80% commission model, unseen before in the UAE.

The trio of partners offers unrivaled experience in Dubai’s dynamic real estate sector, all having worked together for many years previously.

Now, just two years on, the company has outgrown its existing offices, with a 35-strong team, set to grow as sector pundits predict real estate market growth of some 13% in 2023 as reported by HSBC and Bloomberg.

Demand is outstripping supply in terms of apartments, as the price point and lifestyle offered in Dubai continues to attract ex-pat buyers in their droves. Prices, however, are expected to rise by up to 46% in the most popular areas, with Hyre warning wavering buyers to commit to a purchase sooner rather than later.

Director Myles Bush says: “Our company is growing so fast, we’ve had to seek out larger premises. And our rapid growth reflects the monumental growth in real estate sales we’ve witnessed post—pandemic.

“Not only are clients drawn to Phoenix Homes because of our deep experience, knowledge, transparency and trustworthiness, but real estate agents are keen to join Phoenix because of our market-leading commission model. More and more brokers are leaving the traditional 50/50 commission model behind and gravitating towards our 80% split.”

The company has plans to grow by 100% this year, backed by continuing positive market sentiment, post-pandemic, which has seen a flurry of new buyers heading to the emirate, attracted by high quality, low prices and strong economic growth.

The company’s move to the iconic I-Rise tower is slated for March, after two years in a 2,000 square feet office.

“Many people thought our different commission model would be unsalable. But the move to larger premises and our rapid growth goes to show how we have turned this company into a huge ongoing success story. It’s also lovely to see Dubai brokers finally taking a larger slice of the pie rather than accepting the usual 50-60% commission offering,” concluded Hickey.

January 26, 2024in DXB News

Tenants use falling rents to upsize homes in Dubai

Landlords use incentives to reduce void periods on their properties

A majority of tenants in Dubai are capitalising on the decline in rents to move to a bigger property. Some of them are also bargaining with their landlords to renegotiate more favourable contractual terms. Previously, when rents were going up, people chose to move to the newly developed suburbs of Dubai to get better value for money.

“With rents declining, 61.4 per cent of Dubai residents who moved upsized their homes, 16.2 per cent downsized and 23.4 per cent moved into a house of the same size. Rents have been decreasing due to increased supply of new units, enabling an increasing number of Dubai residents to move to bigger and better homes. It has also become easier for growing families to find bigger homes that fit within their existing budget,” says Bana Shomali, founder and CEO, ServiceMarket.com, a marketplace for moving services which conducted a survey to find out why Dubai residents moved during the last 6 months.

In general, Dubai residents who moved are paying lower or same rent even though most of them moved to larger units. Only 35.5 per cent of them are paying higher rents. Only 29.9 per cent of Dubai residents moved to cut down the cost of rent in 2018. Many tenants are now ‘right sizing’, which means they can move to apartments that were out of their reach earlier due to budgetary constraints.

Real estate consultancy Chestertons estimates that apartment and villa rents declined 4 per cent and 3 per cent respectively in Dubai in Q3 this year. The biggest declines for apartment rents have been witnessed in DIFC and Discovery Gardens which recorded an average decrease across all unit sizes of 6 per cent and 7 per cent respectively from Q2. In the villa market, the biggest average rental declines have been seen in Al Furjan at 6 per cent with Palm Jumeirah and Jumeirah Islands at 5 per cent.

“Declines appear to be most prevalent in smaller apartments. Across the board, studio rents decreased by 6 per cent, while 1BR and 2BR units declined by 4 per cent and 3BR units declined by 3 per cent. In the past, smaller unit types have been more resilient. However, due to increasing stock, these units are becoming more volatile. Similar adjustments can be observed when it comes to villas,” says Ivana Gazivoda Vucinic, head of advisory and research, Chestertons Mena.

The higher end of the market has taken more of a dip than other areas. “We have seen Palm Signature villas and Emirates Hills villas for rent decline by 10 to 15 per cent over the past 6 months,” observes Myles Bush, CEO, PH Real Estate.

Says Simon Baker, managing director, Haus & Haus Real Estate: “Topping the list have been prices of townhouses, with some dropping as much as 20 per cent in the last 12 months.”

Established communities offering good facilities at affordable rents are witnessing only small rent movements. “In the apartment sector, Motor City, The Greens, Dubailand, International City and Dubai Silicon Oasis witnessed the smallest movements – with a 2 per cent decline for Motor City and the remainder at a 3 per cent decrease. In the villa market, Jumeirah Golf Estates, The Lakes, Victory Heights and Arabian Ranches witnessed the smallest movement with a 1 per cent decline in average rents,” explains Chesterton’s Vucinic.

Rents are expected to decline further throughout 2019 as a consequence of additional supply being added to the market.

“Logically, any market should revert to the fundamentals of ‘supply and demand’. Logic dictates, usually, that prices could drop further with the increased number of units coming onto the market. However, Dubai authorities are making sensible changes by lowering operating costs for businesses and improving the overall laws that govern immigration/visas laws. These positive steps, supplemented by an oversupply in stock levels, means that it is very difficult to come up with a concrete forecast for the upcoming trends,” observes Bush.

Generally, tenants are seeing better value for money and greater levels of availability – across the board – and are either negotiating better rents and terms with current landlords or moving to newly handed over developments with competitive pricing and a strong focus on good facilities and amenities.

“With rents having dropped by as much as 30 per cent in the last 2 years, many tenants are using this as an opportunity to upsize in a declining market,” continues Baker.

Landlords are becoming wiser and feeling the need to reduce void periods for their property by lowering rent and offering more cheque payments to retain/attract tenants.

Due to additional stock being available and limited new demand, landlords have to compete not only on rents – but also introduce incentives to attract and retain tenants. “These incentives include multiple rent cheques, some of which are even extending to monthly payments, as well as rent-free periods. Other incentives have included the waiver of security deposits, multiple cheques to cover utility bills, short-term leases and in some cases we have witnessed landlords covering the cost of agency fees.

“We have also seen landlords with older properties upgrading or re-investing in their units to compete with the newer developments. Properties that require maintenance or upgrades are being overlooked by tenants in favour of better quality or newer units on the market,” concludes Vucinic.

January 26, 2024in DXB News

Tenants use falling rents to upsize homes in Dubai

Landlords use incentives to reduce void periods on their properties.

A majority of tenants in Dubai are capitalising on the decline in rents to move to a bigger property. Some of them are also bargaining with their landlords to renegotiate more favourable contractual terms. Previously, when rents were going up, people chose to move to the newly developed suburbs of Dubai to get better value for money.

“With rents declining, 61.4 per cent of Dubai residents who moved upsized their homes, 16.2 per cent downsized and 23.4 per cent moved into a house of the same size. Rents have been decreasing due to increased supply of new units, enabling an increasing number of Dubai residents to move to bigger and better homes. It has also become easier for growing families to find bigger homes that fit within their existing budget,” says Bana Shomali, founder and CEO, ServiceMarket.com, a marketplace for moving services which conducted a survey to find out why Dubai residents moved during the last 6 months.

In general, Dubai residents who moved are paying lower or same rent even though most of them moved to larger units. Only 35.5 per cent of them are paying higher rents. Only 29.9 per cent of Dubai residents moved to cut down the cost of rent in 2018. Many tenants are now ‘right sizing’, which means they can move to apartments that were out of their reach earlier due to budgetary constraints.

Real estate consultancy Chestertons estimates that apartment and villa rents declined 4 per cent and 3 per cent respectively in Dubai in Q3 this year. The biggest declines for apartment rents have been witnessed in DIFC and Discovery Gardens which recorded an average decrease across all unit sizes of 6 per cent and 7 per cent respectively from Q2. In the villa market, the biggest average rental declines have been seen in Al Furjan at 6 per cent with Palm Jumeirah and Jumeirah Islands at 5 per cent.

“Declines appear to be most prevalent in smaller apartments. Across the board, studio rents decreased by 6 per cent, while 1BR and 2BR units declined by 4 per cent and 3BR units declined by 3 per cent. In the past, smaller unit types have been more resilient. However, due to increasing stock, these units are becoming more volatile. Similar adjustments can be observed when it comes to villas,” says Ivana Gazivoda Vucinic, head of advisory and research, Chestertons Mena.

The higher end of the market has taken more of a dip than other areas. “We have seen Palm Signature villas and Emirates Hills villas for rent decline by 10 to 15 per cent over the past 6 months,” observes Myles Bush, former CEO, PH Real Estate.