This summer, Allsopp & Allsopp have seen a 14% rise in tenant registrations from the period between 1st of June to August 22nd of 2018, to the period between June 1st to August 22nd of 2019. Summer is said to be a slower season in the real estate market, but we have seen a lot of movement over the last few months and wanted to dig deeper to find out the motivation of our tenants.
We spoke to several tenants who rented a property with us between June 2019 to August 2019 to find out the trends within the rental market this summer. Expanding families, property and area upgrades, saving money and being new to Dubai have come out on top.
The decline in property prices across Dubai has been heavily documented this year, mainly showing the negative impact on the real estate market. However, we need to look at the affordability it has given the families who call Dubai home and perhaps the pull for expats to make the jump and move to the city to start a new chapter knowing that prices of rental property are not through the roof and unreachable!
51% of our tenants have decided to upgrade and move to a home which was previously out of their reach. The drop in prices have given Dubai residents a choice of properties with more bedrooms, better locations and improved facilities which are now within their budget. Many of our tenants are expecting their first baby or are welcoming another member of the family and are in need of more space. Fortunately for them, they have the affordability to look into upsizing in a desirable area which matches their criteria.
An expanding family can be a life changing event and one which comes with financial burden, in some cases, this can mean a relocation back to their home country. The decline in rental price has given residents more control and stability in the city. It is encouraging to see so many people starting families and really settling into life in Dubai.
Of the 51% of tenants upgrading, 15% of those have had the luxury of moving from an apartment to a villa where they can have more space for family time with a garden for barbeques, play sets and even a pool, which inevitably will improve their quality of life.
Many tenants have been looking into their options in the market after brokers have been showing them what is available across the whole of Dubai within their budget. Tenants know which areas they can afford to rent in – areas which were previously out of budget. 30% of our tenants moved from one community to another this summer, some of which were upgrades, for the simple reason that they had more choice within their budget. When doing research into areas within their price bracket they found that they had much more choice when looking for their home. In some cases, tenants had moved to the same type of property in the same area for a lower price. For example, a 2-bedroom apartment in Marina promenade in June, 2018 was rented for AED 160,000 whereas a 2-bedroom apartment in Marina Promenade in June, 2019 was rented for AED 130,000. Similar price decreases were seen in a 2-bedroom townhouse in Palmera in the Arabian Ranches from AED 130,000 in June, 2018 to AED 115,000 in June, 2019.
9% of our tenants have decided to downgrade their rental property in line with the price reductions. Circumstantial changes such as redundancies are inevitable wherever you are, but expats are no longer moving straight home when this occurs and are choosing to downsize and pay less for a property in the hope that new opportunities will arise. People can now, in some circumstances, still afford to stay in the city while they look for other opportunities, whereas a couple of years ago, this may not have been as easy to do. The affordability of rental properties in Dubai is giving residents more choice and more time.
On the other hand, some tenants have decided to take advantage of the price drop and downgrade to a cheaper property giving them the opportunity to save extra money to put towards a deposit on their first home in Dubai. First-time buyers in the city should expect to pay roughly 33% of the property value upfront. This is proving difficult for many first-time buyers in the city and the drop in rental prices can be beneficial for those looking to get onto the property ladder whilst prices are attractive and within reach.
29% of tenants who rented through Allsopp & Allsopp this summer were new to Dubai. According to Dubai Statistics Center, the population of the city has grown by 37,102 people from the 1st of June 2019 to 25th August 2019. Residents who are new to Dubai have moved for the vast job opportunities and the chance to live and work in a vibrant, fast paced city. A few of these tenants are moving over to work on Expo 2020 which will commence on October 20th, 2020. It is encouraging and exciting to see what we have heard about for such a long time finally coming to fruition and bringing people and opportunities to the city already with over a year to go before the big event.