Rates for apartments in fashionable areas of Dubai have plunged and desperate landlords are even taking quarterly or month-to-month payments.
Tenants trade up as rents decline
DUBAI // With a total area of 650 square feet, not much larger than a two-vehicle garage, the flat does not exactly make for palatial living. But why the new tenant pounced on it is obvious, says Anastasia Tyamusheva, a leasing consultant at Hunt & Harris Real Estate who showed the unit before it was rented. "It's a huge studio, and it's fully furnished - TV, bed, sofa, table, kitchen," she says. "You basically just need your suitcase."
For a Dh70,000 (US$19,000) annual rent the flat comes with unobstructed ocean views from its 18th-floor terrace in a Jumeirah Beach Residence tower. It is a combination of luxury and affordability that, according to Ms Tyamusheva, has made its new resident "a very happy man". In a housing market badly battered by the global financial crisis, that tenant's good fortune is evidence that the situation in Dubai is not bad for everyone.
However painful they may be for developers and the thousands who bought into projects that are now stalled or have been cancelled, plummeting housing prices have greatly expanded the choice for many people hoping to get their first place or upgrade their accommodation. Recently, The National toured parts of Dubai to see what sort of housing prospective renters could get for Dh70,000 a year. The result was a fetching array of amenities that, not too long ago, would have been well beyond the reach of that kind of price.
Indeed, as well as being near to beaches, malls and restaurants, many properties are available from landlords who are now (reluctantly) accepting quarterly or, in some cases, monthly rental payments instead of demanding the traditional lump-sum payment up front. The situation represents a reversal of bargaining power that has prompted a migration of tenants to more luxurious and conveniently located flats, says Blair Hagkull, the managing director for the Middle East and North Africa at Jones Lang LaSalle.
"One of the things we're seeing, not only in our office-leasing business but also in our residential side, is the fact that in a market where prices are subsiding, there's an opportunity for people to upgrade," he said. "What is interesting is that you have people who are saying that if you want to pay with one cheque, then the price is this. "If you want to pay in monthly cheques or quarter cheques, then the price is that."
This is strikingly evident in such middle-income communities as The Greens, Discovery Gardens and International City as well as in Mirdif, where two- and three-bedroom villas can even be snapped up for Dh70,000. Yet it is in Dubai's high-end, once exclusive locations, including Downtown Burj Dubai and the Marina, where some of the steepest price slides appear to have occurred. Now a Dh70,000 budget can get a one-bedroom flat with plush interior, sea views, and access to rooftop pool and gyms, which recently would have meant paying a minimum of Dh110,000.
In the case of the Jumeirah Beach Residence studio, conveniently located next to restaurants and shopping on the popular promenade The Walk, Ms Tyamusheva reckons that "last year, if you were in the market for this, you would have paid a minimum Dh100,000 - minimum". The same goes for other, similarly priced flats she shows off in the Marina, such as in the Marina View Towers. She recently introduced a prospective tenant to a 750-square-foot, one-bedroom unit in that building. For a shade over Dh70,000, the tenant would have a "full marina view", a fully equipped kitchen and a washing machine.
"It would definitely have been around Dh120,000," a year ago, she says, adding: "It's good value, but not so much for the landlord, obviously." Even in one of Dubai's priciest areas, the up-and-coming Downtown Burj Dubai, the Dh70,000 budget can go a long way, says Prem Mulani, an estate agent with a decade's experience in the emirate. A prospective tenant who bargains hard enough, he says, can land a 726-square-foot flat with views of what is expected to be the world's tallest building - for Dh70,000. "Even some of the furnished ones can go for 80K."
He believes the best bargains, though, are in the 53-floor Marina Crown tower, where fully furnished flats of 900 and 1,000 square feet, with multiple rent payments as the norm, are available for as little as Dh65,000. "It's about three or four cheques now," says Mr Mulani. "Before, it was, 'Give me Dh120K and one cheque only, sir'. Back then, if you asked a landlord for two cheques, they'd laugh."
For someone able to bear the noise of nearby construction, a Marina Crown flat offers views of the Palm Jumeirah as well a full living room sofa set, king-size bed, abstract art on the walls and kitchen wares. "Once the buildings around here are finished, this view will be preferred," Mr Mulani says from the balcony. "The main attraction is that it's furnished, but also the view." Then, as if struck by a moment of clarity, he corrects himself: "Well, actually, they want the low prices. People here want low prices, and now they can get them."