Dubai Landlords start to understand the Concept of Monthly Rental Payments
The current situation in the market has forced Dubai’s commercial landlords to reconsider taking advance rental payments. Moreover, in the residential areas, landlords have accepted the fact that rental payments are the best option, for the time being. If tenants can successfully make a solid case on monthly payments, then they might just be able to break away from the dominance of the landlords who collect tenant cheques for six months or quarterly in advance.
By collecting these in advance, landlords get to lock in heavy amounts of tenants’ payments. In times like these, cheques being squeezed out from one’s income seem like antiquity. Asteco’s new report about sale trends and half rental in the marketplace of UAE, says that monthly payments via credit/debit cards will be the new norm, and property management structure will have to adjust according to its requirements. Moreover, they state that a new trend regarding flexible Residential alternatives might start regarding lease terms and a more restricted upfront capital requirement because of short term employment options. Furthermore, to deal with concerns about job security.
However, various other sources in the market claim that in order to bring extensive advances for tenant-landlord transactions of payment, it might take three months or more. Monthly cheques were presented as a part of landlord incentives, in 2009-12; however, these practices were discontinued in favor of six or three-month advances due to the signs of rental market firming up.
Seeing the type of environment COVID-19 has led to, payment terms might become easier again. Asteco’s report says that rental changes are not the biggest priority of tenants unless the rates are reduced.
Whereas, property services firm says that even after incentives and discounts given by commercial and residential landlords, it is expected that the number of renewal and new leases in the short run will be fewer, as tenants will adapt to the wait and see approach.
Have Rents Dropped?
From April to the end of June, rents in residential areas have dropped by four per cent and, overall, during the past 12 months, thirteen per cent has dropped. Forecasts show that the drop patterns will either intensify or remain constant for the time being; this is due to the impact on employment opportunities.
Decrease in Supply
We will see a prominent decline in the off-plan supply and construction. Research suggests that almost twenty per cent of under construction plans are on hold indefinitely. About 4,200 apartments were handed in the 2nd quarter.
Developers in Dubai and Sharjah have a lot to do in order to absorb the flow of projects that have been completed; most of which are small parts within a massive development. For example, the sharpest fall was felt in rents in high-end apartments in Sharjah, with a drop of eight per cent, compared to the previous year. The falling rates in rentals are bound to add pressure and impede recovery rates in the northern areas of the emirates. The cuts in salaries and jobs has tempered with the potential for rental increases, leaving tenants with the choice of; downsizing, leaving the apartment altogether or reducing expenses.
Dubai’s Rental Disputes Settlement Centre has given permission to business operators to terminate contracts. Moreover, if a tenant needs aid for rental disputes, landlords are forced to give back the advances they have taken. These types of reliefs are only provided when a tenant is in grave loss.