Dubai tenants 'well positioned' to demand rent-free periods

New research says Dubai tenants are in a strong position as 2019 remains challenging for the UAE real estate market

Dubai tenants are well positioned to demand rent-free periods while property owners are being offered flexible payment terms as the first half of 2019 remained challenging for the UAE real estate market, according to new research.

Cavendish Maxwell's UAE Property Market Report for Q2 highlighted continued declines in both prices and rents during the three-month period to the end of June.

It said average sales prices and rents softened across most communities in Dubai in Q2 but over the 12-month period, the average rate of price decline has slowed.

Aditi Hariharan, senior consultant, Strategic Consulting and Research at Cavendish Maxwell, said: “The first half of the year remained challenging for the UAE property sector, as rents and prices continued to decline.

"Conditions remain conducive for tenants who are well-positioned to demand rent-free periods, fee waivers and flexible payment terms from property owners, and potentially upscale to bigger units which may have previously been beyond their reach.

“Whilst we have noticed a slower rate of price declines in some areas over the last 12 months, this is still contingent on new supply and actual materialisation rates, which have averaged 40-50 percent over the past few years. The government continues to introduce measures to stimulate the market”.

In Dubai, average apartment prices declined 15.1 percent and villa/townhouse prices declined by 14.7 percent in Q2 from a year ago. During the same period, rental declines for apartments in Dubai averaged 12.5 percent and villas/townhouses registered a fall of 12.6 percent.

Off-plan transfers continued to dominate in Q2 2019, accounting for more than 52 percent of total transfers, the report noted.