During the last few weeks, new trend has emerged within the Dubai real estate market. Property owners and agents are jointly trying to inflate rents and selling prices of prime residential properties. Their actions are triggered by the recent extension of residency visa for real estate investors to three years from previously six months and renewed optimism about the local economic recovery from October this year onwards.
Interesting incidents have begun to occur, such as sellers canceling deals just hours before signing few months-long negotiated agreements and landlords raising the rents of existing tenants.
How sustainable is this trend is not yet clear, but on the other hand the evidence for oversupply of residential and office units in Dubai is plenty. Quick check at Dubbizle’s “Property for Rent” section shows that the current number of offered units stands at 27,783. Gulf News classifieds feature even greater number of properties on offer right now – 44,026. Driving around the city, one can see many brand new, modern looking buildings springing up and ready to be occupied. Nakheel and Dubai Property Group even lure tenants by offering unbeatable low rents and two months free stays for units in Dubai suburbs.
Burj Views is a three towers development of Emaar, located right behind the Downtown Dubai. It consists of approximately 750 studios, one and two bedroom apartments that have been handed to its owners in July 2009.
Two-bedroom apartments are with standard size from 1,240 sq. ft. to 1,490 sq.ft. Currently tenants are renting units with great Burj Khalifa views for AED 100,000, while units with partial landmark’s views have been rented for AED 85,000 or 90,000 under standard payment terms of up to four installments. A good number of units remains unoccupied.
Nevertheless, during the last week few Burj Views two-bedroom apartments were listed on Dubizzle with rental values of up to AED 160,000. These listings immediately provoked many real estate agents to follow suit and increase their listings’ figures by AED 10,000 to 20,000 on average. Now, the average asked rents are from AED100,000 to AED120,000.
While these inflationary activities occurre since the announcement of the residence visa extension, property buying activities are not on the rise at all. Moreover, the number of empty units in particular in the Burj Views towers have increased significantly.
No matter what one can read on the Internet, the options of property owners still remain limited. They can continue asking for high rents and keep their apartments open for viewing, or they can negotiate reasonable contracts and receive regular ongoing payments to secure their mortgages.
It is pretty obvious that even with a revised property law, tens of thousands tenants will not arrive in Dubai during the next few months to occupy all the ready to move in empty units and create demand for more.