If you don’t know the market, finding the perfect apartment can feel like an ordeal in Dubai. But it needn’t be, say the city’s property experts
Where do you live? What do you pay? When did you last move? Conversations that may never be approached in other cities are considered acceptable icebreakers in Dubai. Time Out estimates that around 70 percent of the city lives in rented accommodation yet it remains a divisive issue among residents new and old. While practises such as insistence on paying a full year’s rent upfront and difficulty in handling landlord disputes are being addressed, it is still an ordeal for many renters. We crunched the numbers, spoke to the experts and scoured the city to bring you the guide to renting now and next year.
What’s going on? As any expatriate lured to the city on the promise of year-round sunshine knows already, Dubai doesn’t need weather forecasts. News bulletins in the city should instead be followed by property predictions. While there is every chance of accurately guessing temperature and sunshine hours each day, the job of projecting property prices is much more turbulent. Up, down or steady. It shouldn’t be so difficult, but with a pendulum that sways rapidly between boom and bust, moving at the right time is a game that can make or break even the most modest of financial forecasts.
Erik Volkers, senior consultant for commercial real estate adviser CBRE Middle East, reckons market forces are tilting things in favour of renters at the moment. “Since the second half of 2014, Dubai’s residential market has experienced a slowdown in activity, which can be attributed to a combination of local and global events that have dampened demand and impacted the market sentiment,” he explains. “The residential market is expected to remain subdued over the course of 2015, with weaker demand expected to lead to further declines in both sales and leasing rates.”
A decline in rates may not have landlords jumping for joy, but it’s good news for house hunters looking to move in the next few months. Volkers says that more good news could be on the way as new properties are completed, giving renters more options. “With more than 22,600 new units set to enter the market during the course of 2015, landlords are likely to face increasing competition in securing tenants, which could accelerate deflationary effects on the market.”
More houses equals more options equals less competition. Makes sense.
So is now a good time to look for a new abode? Volkers seems to think so. “Considering rents have stabilised or even slightly dropped in some areas in Dubai and given the substantial number of new residential units entering the market, this might be a good time to consider moving. We expect rental rates to see further declines in quarters ahead. Tenants who are due to renew their tenancy contract are in a strong position to negotiate the rents given the current market conditions.”
Propertyfinder.ae analysts agree that this year the pendulum of property rental has swung in tenants’ favour. They have observed this trend in the lowering of rates to be true not just for the high-rise towers and apartments but also for the more expensive villa market. “On average, villa rental rates were also down by two percent this quarter, and five percent compared with the same period last year. This was due to the handover of new supply, which started to affect existing communities as tenants had a wider choice of a new and better quality product,” says Lukman Hajje, chief commercial officer at Propertyfinder.ae.
“For new tenants, opportunities were available as landlords became more flexible with payment terms (in some cases up to 12 cheques were accepted) and other incentives, such as rent-free periods. This was evident in areas with high vacancy levels.
It has become more of a tenant-driven market that has forced landlords to become more flexible and negotiate rates and rental terms in order to secure tenants. Even for those seeking villas,” adds Hajje.
Propertyfinder.ae market insights say that new completions in some of the newer neighbourhoods in Dubai are turning areas that are further away from Sheikh Zayed Road into the latest des-res. “Interestingly,” says Hajje, “IMPZ, Dubai Sports City and Dubai Silicon Oasis recorded higher rentals than last year as these were, at that time, negatively affected by the fact that they had not yet completed. As occupancy rates increased and the communities saw significant improvements in terms of provisions of supporting facilities, these are now gradually becoming popular mid-market residential areas.”
Know your rights
It is worth remembering that the Dubai rental market is like few others in the world. Toby Young of Property Rights UAE outlines ten things to remember before signing your rental contract.
2.When writing rent cheques, ensure that you address them directly to the landlord. Before handing over cheques ask for a copy of your landlord’s passport and the title deeds. This is not uncommon.
3.Ask your real estate broker to check that all service charges have been paid by the landlord and if possible get it in writing, too. If not, this can cause issues further down the line.
4.Ask your real estate broker to check that there are no outstanding bills for DEWA (Dubai Electricity and Water Authority) or the air conditioning. If there are they will need to be paid before you can set up an account.
5.If there are maintenance issues that need to be resolved before you move in, ensure that they are taken care of prior to signing. It is a lot easier to have repairs made before you sign the contract and move in.
6.Make sure you are aware of how many car parking spaces you have and where they are in the car park. It is not uncommon for there to be only one to share between a husband and wife. Also find out if there is provision for visitor parking.
7.Make sure you know how to access all parts of the building. Often security swipe cards and/or remote controls are needed as well as door keys to enter your property.
8.If the property is not clean before you move in ask for it to be cleaned in advance of your doing so. A property should be handed over in a habitable condition and that includes clean.
9.Take photos of any issues you find with the apartment and let your real estate agent and landlord know as soon as possible. This will avoid issues when you try and prove they existed before you moved in.
10.Once you have your tenancy contract, sign up for Ejari documentation. Essentially this is registering your rental contract with the Dubai government. This is a legal requirement and you will often need it to engage with government offices. Register at www.ejari.ae.