For tenants, it has become another useful tool in their negotiations with landlords to bring down rental payments, according to a first quarter update on the property market from Cavendish Maxwell.
“The number of landlords offering flexibility to pay annual rent through multiple cheques has increased,” said Sofia Underabi, Head of Residential Valuation at the firm. “In recent months, tenants have been able to negotiate terms downwards on renewal.”
The rental declines are starting to show up in small units as well, which would be another boost for tenants having to cut corners to meet expenses. When rents in Dubai first started to come under pressure, it was limited to high-end apartments and villas in the city.
Now, declines are “more pronounced among studios in DIFC, International City clusters and Dubailand as well as four-bedroom villas in Victory Heights,” the report says.
Even in Abu Dhabi, rentals were starting to see softening for smaller units, such as two-bedrooms at Al Raha Beach and four-bedroom villas in Al Raha Gardens.
Larger units, meanwhile, are “facing occupancy pressure from weakened demand as job insecurity continues in the emirate, especially for senior level executives,” said Manika Dhama, Senior Consultant.
According to the firm, about 1,200 units were completed in the first three units at Abu Dhabi’s real estate investment zones.
Of these, 83 per cent were apartments, mostly in the Saraya, Corniche area.
If all goes according to plan, a further 7,800 units are scheduled for delivery during the rest of the year, concentrated within Abu Dhabi City and on Al Reem Island.
In Dubai, the firm estimates about 2,500 homes to have been delivered in the first three months, broadly in line with market projections of 3,000 plus units. But everyone will be keeping their eyes peeled on the job situation in the country. Losses at key organisations dampened rental demand – both at the individual basis and those engaged by major employers for staff accommodation.
More pressure is likely from further changes in the UAE’s corporate landscape.
“Continued downward pressure on housing demand is expected to continue in Abu Dhabi due to job uncertainty resulting from high-profile mergers of government-backed entities,” said Underabi.
“These could also result in a readjustment of employee benefit packages such as housing allowances, thus softening demand and resulting in further price declines.”
Off-plan muscles out secondary sales activity
• Off-plan sales easily accounted for the majority of transactions in Q1-2017. International City and Dubai Marina led as the main locations where secondary sales held sway, while off-plan apartment sales were led by Downtown, Dubai Creek Harbour, Dubailand and Dubai South. For villas, the majority of transferred sales were completed in Emirates Living and Reem, according to Cavenidish Maxwell.
* In Q1-17, the average price for a villa sold in Dubai was Dh2.2 million, mostly in areas such as Reem and Dubailand. In comparison, the average during Q1-14 was Dh3 million plus.
* Average apartment prices transacted during Q1-17 were in the region of Dh1 million to Dh1.5 million.