By Alex Delmar-Morgan
EXCLUSIVE: New era begins in emirate's real estate rental sector amid slowdown.
A new era has begun in the Dubai rental property market with a number of landlords offering monthly rent payments as bank lending tightens and the real estate market cools, Arabian Business can reveal.
From being a one-cheque culture just six months ago, the emirate's landlords are starting to offer 12 cheque payment schemes to tenants in a bid to fill accommodation.
With more properties coming onto the market as job losses mount and tenants downsizing amid the global crisis, landlords are increasingly showing more flexibility, keen to secure rental income, it has emerged.
Dubai broker Smith & Ken Real Estate is currently advertising a monthly payment deal for properties on its books in Old Town.
Antony Anderton, sales negotiator at Smith & Ken said: “Landlords are having to be more creative in the current climate.
“Especially with banks not willing to lend, a 12 cheque system is more appealing and it means people don’t have stump up a huge sum of money in advance. This will become more common in Dubai,” he added.
“More landlords are offering this, it’s happening very quickly, people are rapidly moving in this direction,” said Ryan Mahoney, managing director of agent Better Homes.
“Rents are coming down because demand has fallen and supply has risen through [job] layoffs and number of people releasing their units into the market.”
Landmark Properties is also offering 12 cheque deals on Discovery Gardens and the downtown Burj Dubai development.
Better Homes told Arabian Business it too is offering the deal on some its properties.
Rising supply is pushing rents down, which spiralled in the first half of last year before the six-year property boom started to correct.
Lack of bank lending has meant that many residents are unable to get financing to pay for a year’s rent in advance, so landlords are being forced to make payment easier.
Earlier in the month property consultant Asteco said in a report that rental growth slowed in the final quarter of last year.
Average annual rent for studios, and apartments with one, two and three bedrooms in Dubai were 80,000, 123,000, 165,000 and 243,000 dirhams respectively, Asteco reported
Anderton said that although there was growing evidence of landlords relaxing payment plans, they were still offering a discount to tenants who could pay a year’s rent upfront.
“Landlord’s are trying to avoid it as they feel it will change the market. But monthly payments will bring Dubai in line with any other developed property market, such as the UK,” he said.
It's about time this started happening. I have always had to take out a bank loan to pay for accomodation and school fees here in Dubai. Hopefully schools will also start monthly payments. Wonder though if the rental contracts can also change to allow tenants to give 1-3 months notice should they so wish. Maybe too much to ask for from Dubai? LOL
Developers of Appartments and Villas should also lower their Maintainance Charges as if Maintainance charges are high it will incurr losses for the investors who already are loosing on falling property prices. Lower Maintainance charges will also lead to fall in rental prices, which inturn will reduce inflation and attract more and more expats in future. So My Advice to developers is to reduce maintainance charges to half the current value and also to banks to reduce the mortgage rates to the levels in other developed economiew to avoid major defaults.
Do not worry DNH... Its now our time. The dominated GREEDY landlords and schools will now bow down on their knees to us and will come behind us begging for our business. For so long they had demanded a price. Now we demand the price and we fix the price. There is no place for greediness. Shelter and Education are essentials in life and both were a luxury material in Dubai which is why we all have been affected now.
The market is 2 , 3 or 4 cheques and will remain so if rationality prevails else it will be priced into the rent. A gimmiky advert by a broker wanteing to move properties by renting them in 12 cheques does not change the market. Whats the point of paying 10 % more in 12 cheques. I'd rather pay in 2 or 3 cheques like i always have and not be charged a premium.
12 cheques, finally 'Lords' have got it. Thereis only so much they can demand , threaten and push the tenant into a corner. Enough is enough! the day has arrived when tenants have finnaly decided to up and leave. Now the fat 'lords' can deal with the aftermath of their greed! Perhaps now they will re consider the eviction notices, astronomical rent hikes, no maintanance, and all the other underhand ways they have used to harrass and threaten tenants. Should we feel sad for these landlords? I think not they are still getting their money.
I hope to see this happening in Abu Dhabi soon, where we are still experiencing ridiculously high (and still rising) rents.
November 2008 - Discussion between me and landlord Brian - How much for your one bedroom and how many cheques Landlord - 115,000 and one cheque Brian - One cheque??? 115 K?? no 100K and 3 cheques sounds better Lanlord - no go to Sharjah its better for you Brian - GOODBYE January 2009 - My phone Rings Lanlord - Mr BRIAN! How are you? its me Mr X are you still looking for a house? i have 1 bedroom for 80 K and 12 cheques Brian - On your bike :-) Happy Ending :-)
Attention all Landlords, welcome to the real world. Ha! You never know, maybe even the rents will fall next. Work on getting the service fees down next, the services have certaily been cut back, know what your paying for. Keen prices will get demand moving again. Dubai resident with high rent.
This is far from over. This may be true for some areas like JLT and Discovery gardens where more accommodation is coming into the market but for small families in the Springs, Greens and Arabian ranches this is still a distant dream....its the audacity of hope which keeps us here...
1 Bedroom payment:- 1 cheque @ AED65,000.00 3 cheques @ AED70,000.00 4 cheques @ AED75,000.00 12 cheques @ AED80,000.00 That is what's happening behind the scene.