Experts in the real estate sector have finally delivered the news tenants have been waiting impatiently to hear. The residential markets will remain tenant friendly in the near future because there will be no rent hike. As per experts, the rents in the residential sector will remain unchanged for a long duration. This is happening because the real estate sector is still stabilizing and due to the current pandemic, there are fewer transactions. Lower sales of properties are causing uncertainty among property analysts as well.
As per the Vice-President of Kamco Invest, properties for rent in UAE have taken one-step-back because of the fall in demand. Prior to the ongoing Covid-19 crisis, the residential sector was starting to recover as the market conditions were favorable. However, under the current circumstances, property experts expect affordability to remain the main theme in the residential segment. As per Kamco estimates approx. 135,350 residential supply units will be added to the GCU during 2020-2021.
According to the analysis conducted by Cavendish Maxwell Property Monitor, we can observe a decline of 10%-14% in the rents. This estimate was for the first quarter of 2020 in comparison with the same time-frame of 2019. According to the estimate, over 6,200 apartments and 800 villas were only handed over in Dubai. Even the Covid-19 rent relief cannot minimize it because the transactions declined to 8700 during the first-quarter of 2020. This decline was 12,444 during the fourth quarter of 2019.
Moreover, the Dubai government is currently drafting a law that will provide a 3-year rental cap to the apartment tenants. This law, if passed, will be similar to the three-year rent-freeze law for properties in Sharjah. If this law is passed the tenants will enjoy a period of three years of no apartment rental hike.
The government is taking this step to cope-up with the ongoing Covid-19 pandemic which is causing job losses and salary cuts. This proposed law has been in discussion since May 2019. Dubai Land Department (DLD) proposed this law to bring greater stability to rental contracts and the real estate sector. Once approved this law will only impact the apartments for rent in Dubai as it doesn’t cover any other real-estate. The main objective of DLD behind this new law is to provide ease to both renters and rentees. Currently, the DLD is providing assistance to both owners and tenants through its Ejari registration.
As a result of job losses and salary cuts, co-living is gaining popularity in Dubai. Co-living is emerging as the new residential concept during the Covid-19 crisis. As most of the companies are adopting Work from home policies, co-living can provide the ideal setting for young professionals. Living in the same space with your colleagues can also serve as an alternative for renting out an office.
Co-living is already in practice within Dubai as Emaar properties are offering it. Their projects Collective & Collective 2.0 and other Socio projects at Dubai Hills are an example of the co-living concept. Apart from Emaar properties, UNA by Nshama at Town Square and Koa’s Canvas located on Mohammed-Bin-Zayed Road are also offering co-living.