Dubai Property Sales Soar 54% as Value Rises 32%

Among the many interesting opinions, facts and figures the survey threw up was the news that the previously strict one cheque requirement for renting in Dubai is on the way out — or at least has diminished greatly.

According to more than half of the survey’s respondents, four cheques is now the benchmark requirement from landlords, with two, three and four cheque deals also being offered. Only six per cent of the brokers surveyed believe one cheque to now be the norm — which, as anyone who has lived in Dubai for more than two years knows, is a huge change in the status quo.

So why the shift to a more flexible approach in the rental market? Well, for a start supply currently outstrips demand and in these cash strapped times landlords simply can’t afford to play hardball and scare away potentially good tenants — hence deals have become more open to negotiation.

Plus, a lot of landlords these days are foreigners, compared to mainly GCC nationals a few years back, and are used the monthly rent system that is prevalent in Western countries — so changing to several cheque payments is not a great culture shock for them.
There is another reason too, namely that the market is maturing and property owners are realising that attracting the right kind of tenant is an investment in itself — and that simply making a grab for a large lump sum can be counterproductive.

As one real estate agent told us: “Landlords’ priorities have changed — now it is not just a case of how many cheques a person can offer, but what type of person they are. They want to be sure that the potential tenant will look after and care for the property and will not be calling every time a light bulb needs replacing. They also want someone who is amicable to deal with.”

However, there was no suggestion from the survey results that one cheque deals are going to disappear altogether, indeed many large companies still pay their leases that way and are happy to do so. But there is no doubt that the attitude of landlords has altered post crisis and we are moving into a new era of open negotiation in Dubai’s property sector.

Indeed there appears to be change in the air all round with recent news reports indicating that rents have started to increase in certain areas of Dubai after the pace of rental income slowed down significantly in 2011 — although they will still continue to fall in outer communities.

Dubai villa and apartment segments saw minor price increases in the first quarter of 2012, after stabilising in the last half of 2011, and this is continuing through to the second quarter.

Indeed, property sales in Dubai soared 54 per cent as value rose 32 per cent in the first quarter of 2012 compared to the same period last year, Dubai Land Department data has revealed. Villa communities such as Palm Jumeirah, Arabian Ranches and the Springs are already witnessing price hikes of up to nine per cent.

So the green shoots of a property market on the way to recovery are there for all to see. And if this is matched with a new, more flexible approach to property hunters by owners, then this could be a time of welcome change all round.