Now is the time to negotiate…
Rents dropped last year, and they’re dipping even more, with a report from Bayut.com showing that rents across Dubai have dropped by 10.4% in the first half of the year (so, for instance, if you’re paying Dhs100,000 for your apartment, you should be able to get it down to Dhs90,000).
Meanwhile, average sale prices in the city have declined by 7%.
The Bayut report shows that the average rent for a three-bed villa dropped by 7.6%, and the average rent for a one-bed has gone down by 6.1% – the only kind of unit that hasn’t budged rent wise are studios, which saw a barely-noticeable 0.1% decline.
Another real estate firm, Asteco, has confirmed the drop – they have said that in the past year rents have gone down by 14% in Business Bay, 12% in Downtown, 11% in Deira and 9% in International City.
Supply is definitely a factor in the decline: Asteco have said that 17,700 new apartments are expected to come online in 2017 (whereas it was 8,750 in 2016). This is great news for renters, as it means more choice – hello City Walk, Mira and Akoya by Damac – and lower rents.
“We do not expect the market to recover until economic sentiment improves in line with increased government spending, further implementation of diversification strategies and the anticipated gradual rise in oil prices. In the meantime, tenants will be able to take advantage of the additional supply across apartments, villas and offices,” John Stevens, managing director of Asteco told Gulf Business.
So how can I negotiate?
Well, a good start is to look at the rental increase calculator. Just key in the details for your apartment (select freehold to find your area if you aren’t in Bur Dubai or Deira) and then put in when your lease is expiring and it will tell you the average range for apartments in the area.
For instance, two beds in Dubai Marina officially range from Dhs120,000 to Dhs160,000 according to the Dubai Land Department, two-beds in Business Bay are Dhs100,000 to Dhs140,000, in Jumeirah Heights they’re Dhs130,000 to Dhs150,000, in the Golden Mile on the Palm Jumeirah a two-bed should cost from Dhs140,000 to Dhs165,000 and in JLT the official average range is Dhs100,000 to Dhs135,000.
If you’re paying above this range, you are definitely in the position to negotiate.
Remember, also, gone are the days of landlords asking for one cheque, so if you don’t negotiate on price, you might be able to negotiate on cheques, and pay in 4 or even 12 cheques. A lot of developers – like Damac, for instance – are giving people ‘a free month’ of rent, so you pay for 12 and get a 13-month contract. This can be a huge saving (but find out what it means for your second year’s rental price before you sign the dotted line).
Basically, look around at prices in the area, and play hard ball – you’re now in a position to. And don’t feel pressure to ‘sign right now’ – every agent we’ve ever come across in Dubai has told us we’re days away from losing out on getting into a building, and it’s very rarely been the case.
Jonathan Rawling, the CFO of compareit4me.com, says to negotiate: “When you’re talking annual rental rates of Dhs100,000 and above, even a 5 per cent decrease can net you some pretty handy savings. After all, you won’t just be saving on the cost of your rent, but you’ll also see your Municipality Fees drop slightly, along with your annual agency fees. As a result, it’s worth asking your landlord for a price cut if you’re renewing soon.”
Wait, shop around and let the bargains come to you. Happy hunting!
Photo: Getty Images