UAE Property Market Turns Tenant Friendly as Rents Fall

Residential, office and retail sectors across the UAE's property market will continue to be tenant-friendly on the back of a wider range of incentives being offered by landlords as the addition of new units is expected to further depress prices and rental rates in the short-term, various market reports suggest. Developers are expected to continue offering a range of incentives such as fee waivers, discounts, rent-to-own, as well as partnerships with banks to attract new investors and end-users looking to take advantage of the lower prices, according to JLL's latest UAE Real Estate Market Performance. "Looking ahead, the residential market is expected to remain under pressure in the short term in light of various macro uncertainties, namely high unemployment rates and a slowdown in population growth. This is in addition to subdued investor sentiment on a global level," said the report. Dubai's office market saw its first new stock additions of the year, with a total of 190,000 sq m of office GLA (gross leasable area) delivered in the DIFC, Downtown Dubai and MBR City, bringing the total stock to 8.9 million sq m of GLA. The most notable of these completions is the ICD Brookfield Place in the DIFC. In Abu Dhabi, no additional stock was delivered, keeping the total supply at 3.8 million sq m GLA. An additional 36,000 sq m and 47,000 sq m of GLA is scheduled to be delivered over the last quarter in Dubai and Abu Dhabi respectively, including office buildings in Dubai Production City and a Grade A building in Abu Dhabi. According to Knight Frank, prime office rents in Dubai fell by an average 6.5 per cent the first nine months of 2020, according to the latest market update by Knight Frank Middle East. In Dubai, rental rates recorded an all-time low in Q3 2020, with declines of 12 per cent year-on-year, surpassing the lowest point of 2010/2011 on the rental index. Additionally, sale prices continued to decline, falling 9.0 per cent year-on-year, JLL report said.