Renters’ market: Move up in life

IMG_1092.jpg

Dubai: Two years ago, Dubai was an owner’s market. Landlords were king and tenants had to settle for whatever was available within their budget. Today, all that has changed.

Real estate professionals admit it’s now a buyer’s market. The buyer gets to decide where he wants to live, how much he wants to pay and what he expects from the deal.

Robert Macnair, Sales Director, Elysian Group, says he sees rental rates in the city dropping a further 20 per cent at least - and that’s on top of the 40 to 60 per cent drop the market’s already experienced. “Rents should keep sliding. I don’t believe they will level out this year,” he says. “Dubai residents are still paying more than what is considered the norm in other big cities. Compared to London, for example, we’re still over the top.”

Freedom of choice

“Until very recently, those with restricted incomes had little choice outside of International City and Discovery Gardens. Today, the same people could consider living in Dubai Marina or Jumeirah Lake Towers,” he says.

In pictures: XPRESS’ comprehensive Dubai rent guide

From all the areas surveyed, Dubai Marina has perhaps seen one of the biggest drops in rental rates. Two bedrooms are currently going for as low as Dh90,000 per year. That’s roughly the same rent as a one-bedroom in Discovery Gardens in 2008!

With a drop like that, it’s not surprising people are moving away from areas such as International City and Discovery Gardens. Macnair claims that in recent months, they haven’t had a single client moving to International City.

Movers Al Sabaa Furniture Transfer and Packaging LLC back up the claim. “Most of our clients are moving out of International City and upgrading to areas such as Jumeirah Lake Towers and Jumeirah Beach Residence,” says owner Niaz Seddiqi.

Hot spots

Dubai Marina and Jumeirah Lake Towers are the hot spots today. No contest.

JLT has seen a 60 per cent drop in rents, maybe even more, admits Macnair. “Now that the Metro station is functional, infrastructure is in place, construction on the roads is nearing completion and new towers have just come onto the market, the area has become more attractive than ever before. All this supply means rents may drop even further,” says Macnair.

With three-bedrooms currently available for as little as Dh80,000 per year, according to the latest Landmark statistics, a further drop in rent could mean that JLT might become the most affordable area in New Dubai.

The time is ripe for residents to upgrade their lifestyles, instead of their budgets.

Laura Adams, Residential Sales and Leasing Manager, Better Homes, says that according to April 2010 transactions, the majority of clients were moving to Mirdif: 26 per cent of people coming to them eventually settled for a home in the once-sleepy suburb, she says.

Gladys Tinio, a Filipino expat who works at a school in Dubai, shared an apartment with her colleagues in Al Nahda, paying Dh60,000 a year for a bedroom with a shared bathroom in 2009.

Today, Gladys has upgraded her lifestyle beyond her wildest imagination. The teacher now lives in Mirdif, in a palatial three-bedroom villa with a private garden and more space than she knows what to do with. “At Dh65,000 a year, I can’t believe how lucky I got,” she says. “True, the sound of planes overhead is a bit of a bother, especially when we’re out in the garden, but upstairs the sound is barely audible.”

Let’s look at the break-up for an average expat moving into a villa such as Gladys’. “The agent asked for a five per cent commission of Dh3,250, plus a Dh5,000 refundable deposit to the landlord. Dewa (Dubai Electricity and Water Authority) costs another Dh2,000 (also a refundable deposit),” says Gladys. She had to pay an additional Dh240 to set up a landline, Dh99 for satellite TV, and Dh149 a month for internet. Fortunately, for most residents moving within Dubai, Dewa isn’t an added expense since the money refunded from their previous apartment goes towards the new one, and the deposit collected from their old landlord is given to the new one.

“With rent paid in three cheques, moving into a villa such as this was well within my budget,” she says. Total rent, when broken down over 12 months works out to Dh5,416 per month. That’s Dh416 above what she was paying in Al Nahda for “less than 10 times the space”.

Jesse Downs, Director Research & Advisory Services, Landmark Advisory, says, “It’s now common to find a one-bedroom [flat] in the Downtown Burj Khalifa area for Dh60,000 per year. Just two years ago, it was upwards of Dh120,000.”

Tenant’s Market

Clearly, rent is the primary motivator for most people. The days of the luxury market are long-gone. Today, apartments in the mid-range sector are the ones in demand. “People are more value-conscious than ever before,” admits Downs. “Proximity to work, living in a gated community, easy road access and impressive infrastructure are all key points people look for when they consider moving.”

Villas Vs Apartments

This entirely depends on whether it’s families or Dubai’s ‘notorious’ singles we’re talking about. Seddiqi observes that families tend to gravitate towards areas such as Springs and Mirdif, while young executives and couples invariably head towards Dubai Marina and surrounding areas. “I see fewer and fewer people moving to areas such as Bur Dubai, Karama and Deira. Astounding, considering these were most in demand a couple of years ago.”

Macnair notices a similar trend. “Due to various factors, not least of which is long driving hours, people are opting to move out of Deira, Sharjah, Al Nahda and Al Qusais,” he says. “Although prices are dropping there too, people who can afford to pay 15 to 20 per cent more, are choosing to upgrade to JLT.”

Now’s the time

“If ever there was a good time to improve the value of your housing, it’s now,” advises Downs. “A lot of clients move home based on their changing requirements,” says Adams. Earlier, you may have a child studying in a Garhoud school, but only be able to afford living in Discovery Gardens. Not so any more. “The bulk of our clients want to relocate to be closer to their children’s schools.”

Similarly, Abu Dhabi and Sharjah residents are upgrading their standard of living. While Sharjah residents are drawn towards areas such as Al Nahda, Al Qusais and Mirdif, Abu Dhabi residents opt for Palm Jumeirah, observes Adams.

Cost of Shifting

Average cost of moving to a two-bedroom apartment in Dubai Marina (mid-range towers)

Rent: Dh90,000

Mover’s cost: Dh3,000

Dewa (refundable): Dh1,000

Deposit to landlord (refundable): Dh5,000

Agency commission: Dh4,500

Total amount due for the year: Dh103,500 or monthly payment of Dh8,625

Flat out for best bargains

A shopping spree for home upgrades is gripping Dubai residents, movers said.

Following last year’s property market downturn, 30 per cent more tenants are shifting into new flats or villas, relocation companies said.

Upgrades

“The deals nowadays are not just about cheaper rents, it’s about value for money; it’s about upgrades. We get requests to move belongings into apartments that have the same rent, but are bigger in size,” said Khurram Abdullah, Manager, Euro Movers International.

Tenants even switch flats within a building if they get better or more affordable car parking space in the rental contract, Chirantan Joshi, Sales and Marketing manager, E-movers, said.

Jad Barghout, Managing Director, 800 Storage and Movers, added: “We’re kept busy throughout the week.”

An average family of four moving into two-bedroom flats in New Dubai areas may need to pay between Dh1,000 and Dh5,000 in relocation costs.

Residents are also upgrading from apartments to villas. A two-bedroom villa in The Greens today costs around Dh110,000 - around the same rent that a one-bedroom flat at Al Barsha used to cost a year ago, Joshi said.

By, Muby Asger and Faisal Masudi, Xpress