They say with time and experience, people know better and get wiser. This is has been very true with how the growing number of tenants gaining confidence in negotiating terms with their landlords has been reshaping the Dubai real estate market in the recent years. As more people choose the city as the place to build their careers in and bring in their families to, they are becoming smarter and more aware of the terms and conditions that they negotiate for when looking to renew their contracts or moving to a new home. There are still a lot of people in Dubai who aren't in the negotiating game, but it only takes time before they realize that the market has become more favorable to them and negotiating becomes the norm for the city dwellers as more competitors go up on the market.
In the meantime, the small percentage of tenants who are conscious of their position have taken the oversupply of properties to their advantage after the simultaneous and consecutive completions of developments since late last year. The new City walk handovers, several completed Downtown and Habtoor City projects, as well as projects by third party developers have added to this situation. In addition to the projects completed by the first half of this year, there are 15,000 apartments, 3,750 villas, and 2.5 million sq. ft. of leasable office space that aims to be completed by the second half of 2017.
The Negotiation Game
These smarter buyers and tenants have become firm in negotiating terms, having discovered their ability to use leverage in this present situation. These terms include lower prices or more frequent installments, among others. People have been moving a lot this year. According to John Stevens, managing director of Asteco, there was a notable increase in the number of transactions during the first quarter of the year.
Sellers in areas with oversupply tend to bend to these negotiations, or be faced with difficulty in filling in their properties. This situation has led to profound changes in the sales figures. There may be an increasing demand for properties in well-developed and already established villa communities, but all areas of the market have been significantly hit by this change; apartments, villas, and offices dropping by 3%, 2%, and 2% year-on-year, respectively. The Meadows and The Springs might have experienced an increase in sales, but an annual picture still showed a figure of 7% apartment sales drop and 10% villa sales drop.
There are still areas in high-demand, like the Palm Jumeirah and Jumeirah Beach Residences, that have rents standing their ground even they've been hit hard on the sales as well. With an influx of project completions as well as a lot of job opportunities up for grabs during the years leading to 2020, the fluctuations in real estate sales will sure be frequent over time; and the tenants will grow even more aware and confident by then.
Featured photos are from an Al Mahra, Arabian Ranches property. View this listing.