28/10/2024
It is not a secret now the pandemic has covered all countries around the world and has had a great impact on the global economy. Thus, it is only a question of the degree to which each exact country and each exact market were affected. Moreover, it is a question of how long they will recover and, in particular, what the next year may look like.
In this post, we will review rental changes in Dubai rental market that have happened during the pandemic:
Well, depends. First, it depends on what property type to consider. Second, it depends on what unit to consider within the group.
So, let's start with apartment rental changes. Here, looking ahead, all types of unit faced rent declines. But let's be specific to discover areas where the declines were the most significant:
At last, let's move to villas. In contrast to apartments, villas were more demanded these nine months.
During the total lockdown, when people were forbidden to leave their dwellings, villas became the “life raft” due to the greater moving freedom they offered. And even after the end of lockdown, people tend to target larger spaces around themselves and their families. And a villa is the exact place that can offer that space.
As a result, in most cases, villa rental prices not only did not decline significantly but even increased:
Before the pandemic, a 1-year rent cheque was the common payment condition. Of course, you might meet a 6-month rent cheque payment, but it was on rare occasions. Now, as many tenants have to face financial difficulties because of a wage decrease, unpaid leaves, or even job loss, these payment conditions became too burdensome for them.
Therefore, landlords started to apply more flexible rent payment schemes. The main goal here is one of the following reasons:
Moreover, tenants can enjoy more flexibility on break clauses now. To clarify, previously, they had to pay a penalty for early lease termination. Typically, it was about two-month rent to pay. However, now many landlords are willing to neglect this common practice. Thus, cases, when free early lease termination is included in the rental agreement, are not unheard of.
The forecast for Dubai real estate market as a whole and its rental market, in particular, is very positive for 2021. That is to say, experts expect market recovery at the end of 2021. At least, there are three reasons that assure this bright future.
First of all, partially, the recovery is related to the fact that new construction has slowed down its pace. To clarify, some (if not many) developers revised their launch plans and confirmed there would be little new-built units to compete. Therefore, the supply will slow down, prices are going to stabilize.
Second, when Covid-19 ceases its grasp and the whole Dubai economy starts recovering (and, fortunately, we are already facing this, though, sinuously yet), we expect an influx of expats who are seeking jobs. This will create a good increase in demand, at least on the rental market, and push the rental prices forward.
At last (but not at least), EXPO 2020 is coming next fall. Undoubtedly, the event will facilitate and accelerate market growth. To clarify, this will happen much earlier than EXPO 2020 officially starts, and its cumulative effect will last much longer than EXPO 2020 in itself.
Yes, now is a good time to get into the rental business or expand it with a few new units. The property prices are low, so you can easily find your best buy. Besides, at BSO, we always ready to assist you in purchasing and managing your property. Get in touch with us to learn more.
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