UAE tenants enjoy rent-free months... how?

If you are an existing tenant in Dubai unable to negotiate a rent reduction with your landlord on lease renewal, consider moving to a villa in Al Furjan or a two-bedroom apartment in Dubai Sports City or International City (clusters).

You are likely to get good deals from landlords here as these units have seen quarter-on-quarter rent declines of more than two per cent in the second quarter of 2017, says Cavendish Maxwell.

"Landlords continue to be flexible in lease terms and rental amounts to attract tenants who are currently benefiting from increased supply and rent declines across the market," said Manika Dhama, senior consultant for strategic consulting and research at Cavendish Maxwell. "Payment through multiple cheques, first month rent-free are some of the options landlords are providing to reduce vacancy risk on their properties."

In Abu Dhabi, rent declines were more pronounced among villas in Al Reef and apartments in Al Reem Island, where rents declined more than two per cent or more quarter-on-quarter.

"The tenant profile in Abu Dhabi is currently more focused on affordable options and this is expected to continue as redundancies from oil price impact on businesses as well as recent mergers in the emirate which have affected high-salaried senior executives more acutely," said Dhama.

Sales prices for apartments and villas/townhouses in Dubai continued to decline during the first half of the year. In Dubai, Victory Heights, Business Bay and International City clusters all experienced year-on-year declines of more than 1.5 per cent on an average in the second quarter of 2017.

Average apartment prices across Dubai have continued to trade within a close range of Dh1.2 million to Dh1.4 million over the last 12 months, while average prices for villas/townhouses have moved down from Dh3.7 million in the third quarter 2016 to Dh2.2 million this quarter.

For apartments, starting prices of Dh700,000 in emerging locations such as Dubai South and Sports City is driving demand from first-time buyers. Communities with existing infrastructure and amenities continue to fare better than outlying areas which have limited facilities and where the majority of the projects are still under construction.

In Dubai, off-plan sales accounted for the majority of total transactions in the first half of 2017. International City and Dubai Marina continued to lead the secondary market transactions this quarter, while the top locations for off-plan apartment sales were Jumeirah Village Circle, Dubailand, Dubai South and Business Bay. For villas/townhouses, majority of the secondary sales were completed in Reem (Mira), Emirates Living and JVC.

Total transactions during the first half of this year have surpassed the volume of transactions over the same period in 2016.

February 2017 was particularly active for off-plan villa/townhouse transactions with new launches in Dubailand and soon-to-be-handed over communities in Arabian Ranches 2 accounting for the majority of transactions during the month.

According to data from real estate agencies, transaction levels for the second quarter are, however, lower than the first. The sales volume in the second quarter comprised 1,000 villas/townhouses and 5,706 apartments.

Approximately 3,100 residential units have been handed over across Dubai during the second quarter and 400 units were handed over in Abu Dhabi investment zones. The majority of the units handed over during the period in Dubai were in areas such as Silicon Oasis, Dubailand, Al Nahda, among others.

New launches during the quarter included 634 residential units in Dubai Healthcare City by Azizi Developments, 200 apartments by Vincitore Real Estate Development in Arjan, Dubai Properties' phase three launch of townhouses in Serena community at Dubailand, among others.

As of June, approximately 27,389 units are scheduled for handover for the remainder of the year, though actual completions may vary significantly. The key locations for upcoming supply this year are: Dubailand, Business Bay, Sports City, JVC and Silicon Oasis. A total of 5,716 villas/townhouses and 21,673 apartments are slated to be handed over from July to December 2017.

For the third quarter, the majority of agents surveyed predicted apartment and villa/townhouse prices as well as rents will remain unchanged. In terms of transactions, 56 per cent of agents expect new buyer enquiries to increase, while 54 per cent expect an increase in the number of agreed sales. The majority of those surveyed (54 per cent) believe new seller instructions will also increase during the third quarter.

Source: Khaleej Times