Refer it to the price correction and the increase in supply
Realtors: The low rental yield drives landlords to retain old tenants
Real estate developers have reported that the price correction and the increase in the supply of housing units in the Dubai market have led to a decrease in the rental income for many owners.
They explained to "Emirates Today", that this decline created a challenge for landlords with regard to leasing their units, as some of them had to offer several incentives, with the aim of retaining the old tenants for fear of a further decline in returns.
In detail, the managing director of the Harbor Real Estate Company, Muhannad Al-Wadi, expected a decrease in the rental values of real estate in Dubai by the end of this year compared to what is currently achieved in the market, in conjunction with the entry of new units into the rental market, in addition to the long hotel lease contracts that affected the Average rental rates in Dubai, and a challenge that fell on landlords.
Al-Wadi clarified that to address these challenges and mitigate their effects, the owners or their representatives must adapt to the current and future conditions and not adhere to high rental values that may not be achieved during the next few months at least.
He stressed the need for the owner to stand with the old tenant and help him in the event that there are obstacles preventing him from paying the rent at the present time, especially since the price correction and the increase in supply in the rental sector have led to a decrease in the rental return for a large number of owners.
For his part, the founder and CEO of "Rowad Real Estate", Ismail Al Hammadi, said that there is a price correction in the rental market, with which the market is expected to witness further declines in view of the transformation of some units from tourism to residential purposes, as well as the entry of new units.
He added that landlords will be facing the challenge of facing this decline in demand, pointing out that the facilities provided by some of them to keep tenants could contribute to supporting the owners' rental returns during the coming period.
Al-Hammadi indicated that the percentage of the rental market's response to the current situation in terms of helping old tenants is very small, given the number of owners who have contributed initiatives to reduce financial pressure on tenants, in light of the current situation with the Corona crisis, indicating that it could be Dropping the payment of some premiums to crisis-affected tenants;
Among the procedures that landlords must follow to respond to market factors, and among the solutions that prevent the lessor from losing the tenant permanently under the current circumstances.
In turn, CEO of “Bayut” Haider Ali Khan said, “Based on the effects on the rental market in Dubai, due to the (Corona) virus, a set of incentives provided by landlords to tenants, especially the old ones, with the aim of retaining them, coincided with an increase in The market supply and a price correction in rental values encouraged tenants to move in. ”
Khan called for providing more facilities for those wishing to renew their lease contracts and providing support and assistance to them in the event of default, by paying checks or postponing it.
In the same context, Chris Hobden, head of strategic consulting at Chestertons Middle East and North Africa, said: “It is expected that the rental market will witness clear challenges and obstacles in the short and long term as a result of the Corona crisis,” noting that these changes prompted some real estate owners to become More flexible with tenants, especially the old ones, in terms of payments and payments.
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