Tenants Upgrade Their Homes Taking Advantage of Lower Rents and Sales Price
3 MIN READ
- Tenants across the UAE have started relocating to bigger homes amidst the changing market trends.
- People are showing interest in moving to bigger places
- Lower interest and loan-to-value ratios have made it easier for first-time buyers to buy a home
Due to COVID-19, renters and apartment owners across the country have realised the need for bigger living spaces. The number of transactions and tenancy agreements for villas and townhouses are evidently highlighting the buyer-friendly atmosphere in the UAE real estate market. Offers for townhouses and villas for sale are getting the most attention due to the provisions of lawns, gardens and pools. Furthermore, people living in 1-2-bedroom apartments are switching to bigger residences to enjoy more space as well.
The prevalent circumstances of the COVID-19 crisis have made people think about their living conditions. Another factor that has convinced buyers and renters of the opportunity these days is the property market’s declining prices. All communities across the emirate have experienced a decline in rental rates as well. The prices for apartments for sale have come down by at least 9.8% whereas for villas, prices have come down by 7.1%. Similarly, rents have decreased by at least 15% across various communities.
As per the secondary sales director at Aqua Properties, Dan McGeachy, people are tired of living in the same old place with the restrictions of the lockdown. They are looking for bigger and better places that can not only accommodate them but provide them with enough space to breathe freely. Most of these properties come with a garden and/or a pool. Coupled with affordable rates, these amenities are playing a significant role to convince people to buy them.
Better Deals in the Market:
According to real estate brokers, there is a surge in interests in communities in Dubailand, Palm Jumeirah, Emirates Living and Dubai Hills. Recent drops in the market prices have inevitably compelled sellers to offer competitive rates. Buyers such as Andrew Cummings, the co-founder of luxuryproperty.com, have moved from an apartment to a villa in Dubai Marina which is one of the most in-demand localities in the emirate.
As per him, the villa was something he had his sights on since 2016, but the prices were never in his budget. However, these days, the markets have been very friendly for buyers like him and thus, he seized the opportunity. From a 1,500 sq.ft two-bedroom apartment, he has moved into a 372 sq. m villa located at the Marina Promenade. He believes that the rents are much easier to afford and the prices are more negotiable than before. The same villa that had an annual rent of AED 300,000 is now down to AED 195,000. He also stated that his 2-bedroom furnished apartment located in Beauport Tower had an annual rent of AED 170,000, so the situation was clear. According to him, he has found a good deal he always wanted and therefore, he didn’t even bother trying to ask the landlord for incentives. He also plans on later buying a villa with a garden and a pool next year.
A significant point that is making investors and first-time buyers want to make a transaction is the attractive loan-to-value ratio. For any transaction of under AED 5 million, the LTV will be 80% for expats and 85% for nationals. For transactions above this amount, LTV will decrease to 75% and 70% for nationals and expats respectively.
Garry Allen, a British expat living in the UAE and working as a real estate broker with Allsopp & Allsopp, also explained how he, along with his wife and child, went from living in a 175 sq. m 3-bedroom apartment to a 251 sq. m 5-bedroom villa. The family relocated from Al Andalus in Jumeirah Golf Estates to Dubai Hills Estate with a rent difference of AED 25,000 only. The rent on their apartment was AED 100,000 while the rental villa cost around AED 125,000. The fact that he got an affordable deal on the villa and a 50% discount on rent during the two-month lease extension on his previous residence was favorable. This further helped him decide to move to a bigger and better location.
Dubai real estate is promising great opportunities for buyers and tenants across the emirate. Brokers, agencies and analysts are all of the opinions that more transactions will continue to rise in the coming months.