UAE tenants paying same, higher rents despite market declines – survey

One in five UAE residents were found to be paying a higher rent for the same property in the second quarter than 12 months previously, according to a new survey.

The findings, based on responses from 1,347 residents collected by comparison site Yallacompare, appear to come in contrary to reports from real estate agents indicating tenants have been able to negotiate rent decreases during the current market slump.

Consultancy Asteco noted that tenants were “increasingly taking advantage of declining rents across the board” in the first quarter as rates fell across the country.

The firm recorded similar declines in rents in Dubai, reaching up to 16 per cent year-on-year, in the second quarter and indicated the trend would continue over the next three months.

Yallacompare said its survey showed 20.4 per cent of UAE residents were paying less in rent than they were 12 months ago, more than 40 per cent were paying the same as last year and 38.6 per cent were paying more.

For 9.9 per cent of those paying more it was because they moved to a larger more expensive property. However, of the 66.5 per cent of respondents still in the same home 30.8 per cent were paying more than last year – or 21 per cent of all respondents.

“There’s clearly a discrepancy between the perceived wisdom that rents in the UAE are dropping and what people are actually seeing on the ground. The confusion arises from the sampling methods employed in surveys,” said Jonathan Rawling, CFO of yallacompare.

“Traditionally, real estate reports focus on the data found in new property listings. With this data, we can track price trends of newly listed properties. This is useful but the fact that the property in question is listed means that there has been a change in tenant.”

Of tenants who stayed in their current homes, just 19.8 per cent were found to have secured a lower rent than the previous year and 49.4 per cent were paying the same.

The majority that secured an increase (52 per cent) only saw a reduction of 5 per cent or less.

Rawling speculated that many tenants thought arguing over the rental rate wasn’t worth the hassle.

Credit ratings agency S&P said in a February report that it expected Dubai’s real estate slump to continue for another two years.

Gulf Business Contribution Time: 03-Sep-2018 10:26 (GMT)
Gulf Business Last Update Time: 03-Sep-2018 10:27 (GMT)