Why Dubai isn’t a landlord’s market - yet

Despite anecdotal evidence that landlords have sought to raise prices on the back of Dubai’s Expo 2020 bid win, there doesn’t seem to have been that much of a bounce

Finding a place to live in Dubai is, right now, a painful experience. It’s not quite as bad as it was in the middle of 2008, when the ‘agent’ to whom I had just handed over AED95,000 to cover a year’s rent in a studio in the Marina attempted to leave the country with my cash. But it’s still a long, drawn-out process that will have you occasionally clenching your fists with sheer frustration.

A couple of years ago, when I was last looking for a place to live, paying by four cheques (or more) was the norm. Nowadays, with the market back in the ascendancy, landlords seem to think that potential tenants are cheating them out of their livelihood by offering four cheques. I offered one landlord a premium of 5 percent, in a bid to cajole him down from three cheques to four; the response was a grunt before the phone went dead.

For the life of me, I cannot work out what the difference between three and four cheques is. I can see why single-cheque payments can work out for both the landlord and the tenant (if they can afford it); the tenant gets a slightly cheaper home, while the landlord receives a big lump sum that will earn far more in interest or through investment than a series of smaller payments would provide. But three cheques versus four? Beats me.

Another bugbear has been a tendency on the part of some landlords to insist on seeing a copy of my bank statements. When you have the ability to put a tenant in jail if one of their cheques is returned, precisely what added security does a faxed account statement provide?

But the good news, for those who are worried about a property bubble in Dubai, is that despite the huge reported increases in real estate values in the city last year, other pressures are ensuring that this isn’t wholly a landlord’s market just yet. Jones Lang LaSalle thinks that about 28,000 new units (an 8 percent increase on current residential stock) could enter the market between now and the end of the year.

From my own experience, this is evident from a wander I took down both sides of Sheikh Zayed Road and through the DIFC last weekend. Older towers are full to the brim, with a couple of exceptions here and there. But there are some colossal new buildings that are virtually empty, with landlords proving far more amenable to negotiated deals there. Further outside the city, a drive past Emaar’s Al Reem project next to Arabian Ranches — the first tranche of which was only launched last April — shows that villas are being topped out, with the exteriors already painted.

I’m also not entirely convinced about how the Expo win will affect Dubai’s property market in the short term. Despite anecdotal evidence that landlords have sought to raise prices on the back of the bid win last November, there doesn’t seem to have been that much of a bounce. After all, the event is still six years away, and a good percentage of those looking for somewhere to live in 2013 won’t even be living in the city in 2020.

Lastly, as I was sitting in a property broker’s office earlier last week, I overheard two agents complaining that prospective tenants were finally refusing to accept any higher prices, and wondering whether the market had reached its peak. While I don’t agree with that last assessment, I am hopeful that the excessive rises posted last year won’t be repeated in 2014, resulting in a much more mature and sustainable growth pattern.

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Posted by: tigress

Well has anyone even started thinking how long is Expo 2020?
What will happen the next day Expo 2020 is over?
Unfortunatel nations do not learn from other nations that have gone over the top and lost it all, u.s, Japan, Hong Kong, Euro.............need I go on more?
Pitty pitty, with all the good visions and Capital, all trust and stability has been lost.
Everyday new laws, turning people's lives overnight..
That's not Fair!
But thank you U.A.E for all you have offered we are honoured for being here.

Posted by: Jyoti Kalsi

our tenant reduced the rent when he heard that rents had gone down. last jan (long before the expo hype) we signed a non-renewable one year contract with him. and have been sending him regular reminders every three months. 3 months ago he wanted to move and asked us to waive the 3 month notice period, which we did. then he changed his mind and is now refusing to move out saying that we should have sent him a notarised notice instead of the polite reminders. based on the rera calculator he insists on paying dhs 42,000 for an apt. that he agrees is worth 55,000 now. so according to the law, he can leave any time he wants, reduce the rent when rents fall and refuse to vacate even after signing a one year contract. but we have to run around getting notices notarised, we have to give him a REASON why we want the property that we bought with our life's savings back; and we cannot ask him to pay the market rent. this is just not fair.

Posted by: Domingo

The law is the law, and thankfully Dubai is not the jungle that some unscrupulous landlords try to make it. First of all Jyoti, there is no such thing as a non-renewable 1 year lease contract.. it's not enforceable. Secondly the tenant is fully within his right to demand a notarised, 12 month notice to vacate. Plus if you just want to kick out the tenant so you can get higher rent..well that's not ethical or lawful.. your 12 month notice should be based on the fact that you intend to sell the property or use for personal use.. else your tenant has the right to sue you for damages later. Now what I don't get is your whining about the Rera calculator. It's put in place to protect interests of both tenants and landlords and seems fair. So if you bought the propery to live in, then live in it, otherwise if you bought it to rent out, then abide by the Laws of the land. This is not a jungle !

Posted by: GVM

There is plenty of fiction gathered from around the web in this article. Take it with a pinch of salt.

Posted by: SA1

Market has peaked I think - I am looking for relocation for last couple months (not in a hurry as well as can't pay ridiculous rent), and it seems now the rents have stabilized or terms can be negotiated.
But again, I am not an expert, and just a hands-on experience.

Posted by: Emma

We've seen significant price rises in areas where new infrastructure is being built ( Tram line; new Metro stations etc) and some landlords are asking unreasonable rentals. However, within the same complex others are far more reasonable. Emma.

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