Dubai landlords under pressure as developers dole out freebies

As the rental and capital values in most areas of Dubai continue to be under pressure, a select number of developers are offering incentives and freebies to attract more tenants. This, experts say, is making things a bit more difficult for individual landlords who cannot compete with big names.

Now, companies like Nakeel have announced that they are offering free two-month stays to thise renting units for a year in International City and Discovery Gardens. Another developer Tameer is offering free furniture vouchers worth Dh15,000 to those buying units in one of its developments.

Moves like these are welcome news for tenants but definitely not a happy scenario for the individual landlords who have to now compete with such offers to lease or sell their properties.

“These types of offers have been in the market to raise occupancy rates post the slowdown. For example, Meraas introduced a 1/2 month rent-free period. Currently, Nakheel is offering the same. We launched a similar offer for Windsor Manor. Such promotions are usually offered for large developments with plenty of stock or emerging communities such as Business Bay, Al Khail and Jumeirah Village. Multiple cheques and monthly payment options are some of the other attractive incentives that continue to be offered.

“Individual landlords have been hit by these promotional methods and have been generally forced to drop rents as per the market conditions. Offering furniture vouchers is a new option but is not very popular,” Dimple Shah, Senior Residential Consultant, Barsha Better Homes, told Emirates 24|7.

Agrees Saeed Hashmi, Head of Valuation & Advisory at Landmark. “The incentives given out in these areas reinforce that there is a large oversupply of residential units in these tertiary areas. As more supply comes online throughout this year and next, landlords will be under more pressure to lower rents. A rent free period upon commencement or renewal of a lease sometimes works better for tenants as cost of moving can be relatively high,” he said.

But individual landlords are not a happy lot as this increase the pressure on them to fill their vacant units.

“Unfortunately the individual landlords will now have to compete and match the offers made or even better them. This is the only way to ensure that the property is leased and does not remain empty, so that the return on investment is not affected,” Paul Musson, Manager, Residential Sales & Leasing, Head Office, Better Homes told this website.

“I have a house in Silicon Oasis. My rent is coming down every year and there is no more an annual cheque. That means the first rent cheque that I get, I should give it back to the tenant,” said an unhappy Lebanese landlord.

The high service charges are often the cause of concern for many residents who have bought property from Nakheel.

“I spent a lot on buying apartments in International City and Discovery Gardens and to top it up Nakheel penalises us with high service charge. It is impossible to match what Nakheel is offering. First, I pay a good amount of my rent to the developer as service charge and then incentives to the tenant. My friends with units in communities developed by Emaar are faring much better,” said an Indian who owns multiple units in these two Nakheel communities.

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