Tenants in Dubai, Sharjah and Ajman said landlords are refusing to reduce the rental value of their housing units in accordance with market conditions. Currently, owners prefer to leave their properties vacant rather than at low prices.
For their part, real estate officials considered that leaving some owners housing units without renting “wrong behavior”, as well as a loss to the owner and does not reflect the normal state of the market rent.
They explained to «Emirates Today» that this behavior is due to the fear of the owners that acceptance of the reduction of the rent of a housing unit can apply to the rest of the units of the property, affecting the rental return of the property as a whole and the expenses allocated to it, calling on the owners at the same time to deal realistically with market conditions for now.
Exit
In detail, tenant Hussein Abu Ahmed said that the owner of the building where he rents a housing unit in Dubai refused to reduce his annual rent when renewing the contract, pointing out that many tenants in the building where he lives came out of it because of the lack of reduction of rents despite market conditions current experiencing a decline in rents. He confirmed that the building where he lived had many vacant units.
Tenant Mohammed Shawky said that when he searched for an apartment to rent in five different buildings in Dubai, he was surprised that rents were not what he thought they were in terms of declines.
When he requested a reduction in the lease value of the contract, as in the buildings adjacent to the same area, the intermediary informed him that the landlord did not want to rent at lower prices than the rest of the contracts for old tenants.
Specification
Tenant Mohammed Abu Mohsen said he wanted to rent a housing unit in Sharjah with certain specifications he wanted to have, and when he asked a rental office about his request, he confirmed that his application was available on more than one model and on more than one floor.in one of the buildings, but when he asked for a reduction in the rent in proportion to the current situation in the market His request was rejected, although the building is new and has a large number of vacant units.
In Ajman, tenant Mansour Abdulaziz said he asked the manager of the building he had been living in for five years to reduce the rent, but the manager informed him that the owner did not want to rent less than the value of the rents during the past year, forcing him to look for another apartment, where he found many options and less rent than the apartment he lived in, despite the same specifications in the two apartments. The building where he lived had many vacant units.
Wrong Behavior
Real estate consultant Mohamed Al-Hafiti said leaving some landlords without renting is wrong and useless, as it does not give him any income, and needs to be maintained on an ongoing basis.
Al-Hafiti attributed this behavior from some to the desire not to get involved in leases during the current period, as they prefer to leave the real estate unit vacant over leasing and enter into the problems of returned cheques, in addition to the decline in rents and the lack of the appropriate return from their point of view. Some landlords refused to commit to a low-value lease and preferred to wait until the required price had been collected.
Al-Hafizi called on owners to take into account market pricesAt present, rent is not at inflated prices, in line with market conditions.
Market Reality
For his part, real estate consultant Abdullah Kazem said that the main problem lies in the fact that landlords have been accustomed to high rental values since the pre-Corona pandemic periods, without looking at the realities of the market who was affected by precautionary measures to reduce the pandemic. Kazem added that the situation is different at the moment, there is a lot of rental supply in the market, pointing out that leaving the housing unit vacant without renting waiting for a high value is a loss to the owner and does not reflect the normal state of the market rent.
He called on landlords to deal realistically with market dataFor the time being, he pointed out that real estate investment as any investment is linked to times in the interest of the owner and other times in the interest of the tenant, and the return on it goes through bullish and bearish curves.For the time being, he pointed out that real estate investment like any investment is linked to times in the interest of the owner and other times in the interest of the tenant, and the return on it goes through bullish and bearish curves.
Rest of the units
Abdul Karim al-Mulla, CEO of Standard Real Estate Management, explained that the problem is not leaving the vacant unit, but in the reduction requested by some tenants, which affects the rest of the building units, which leads the property manager or landlord not to rent and leave some units vacant until a tenant comes satisfied with the rental values set by the owner, and so that the final proceeds from the property as a whole are not affected.
Risk
Halima Al Owais, CEO of Sultan bin Ali Al Owais Real Estate, said that some landlords leave some housing units without renting, especially in periods when rents are low, noting that this is due to the owner’s appreciation of the possibility of higher rents in the future, adding: “This is a risk if prices do not rise, but on the other hand there are tenants demanding further reduction while the owner suffers from lower incomes.”
The value of the building
A property owner, who declined to be named, said that reducing the rent of a housing unit could affect the rest of the building’s income, because tenants inform each other, which would force the landlord to reduce the rent for all, thus affecting the total value of the building and the investment returns, which determine its value if sold.