More UAE tenants paying less rent
As published in Khaleej Times
With the persistent decline in rentals, the number of UAE residents paying reduced rents compared to last year have increased.
However, they have been advised to negotiate prices with landlords at least three months before the renewal of the contract for better bargaining, revealed a new survey.
According to the yallacompare Consumer Confidence Tracker for first quarter of 2019, 30 per cent of residents were paying less rent in the first quarter of 2019 compared to 26 per cent in the fourth quarter of 2018.
“The proportion paying more than a year ago fell to 33.1 per cent in Q1, down from 36.3 per cent in the previous quarter. Nearly 37 per cent are paying the same as a year ago,” revealed the survey results, which interviewed 1,000 residents across the UAE.
“It’s not surprising that more and more people are paying lower rents than a year ago. The proportion paying more, however, is still high and residents clearly need to do more to secure lower rents,” said Jonathan Rawling, CFO of yallacompare.
As a result of new supply and increase in new project launches, rents maintained their downward trend in the first three months of the year. According to a report released by Asteco, apartment and villa rental rates recorded average drop of 11 per cent and 9 per cent, respectively, compared to the same period last year.
Dubai saw 6,700 units being delivered in last quarter: 5,800 apartments and 900 villas.
The yallacompare study reminded residents to finalise negotiations with landlords over price at least three months before renewal.
“We repeat our previous advice – that moving home, with all the associated costs, does not necessarily lead to a significant drop in rent. Tenants are more likely to secure lower rates by negotiating with their existing landlord. This must be done three months before the lease expires, before the contract automatically renews on existing terms,” Rawling said.
Around 70 per cent of the survey’s respondents said they plan to stay where they are living right now.
A study by Cavendish Maxwell revealed that more tenants resorted to monthly mode of payment for rentals. Data provided by Property Monitor showed that the number of 12 cheques increased from 5.8 per cent in 2018 to 8.3 per cent in 2019.
“The data shows that the number of 12-cheque payments rose in the first quarter of 2019 from the average in 2018. However, this depends on individual communities in Dubai and how much competing stock is available in these locations. The flexibility of landlords would vary based on occupancy levels in the particular building/community as well as their individual liquidity position,” said Manika Dhama, head of strategic consulting and research at Cavendish Maxwell.
“Overall, new supply is driving competition and tenants are, as a result, in a stronger position to negotiate rental terms in most cases. As mentioned above, in some cases, liquidity and portfolio positions of individual landlords could also be dictating their flexibility with payment terms,” she added.
Till date in 2019, the real estate consultancy’s data showed that more than 60 per cent of villa rentals were settled with one cheque. The same metric is around 28 per cent for apartments.
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