Why Landlords seek single cheque with demand rising for villas/townhouses as tenants look for larger spaces?
The number of tenants in Dubai who are in need of paying their rent in one single cheque has increased while those making payments in more than that have denied in the third-quarter of 2020 as compared to same period last year.
Rent payments with the number of rental cheques for apartments and villas/townhouses
▪️ Tenants paying one cheque has raised from 31.5% in third quarter last year to 63% in Q3 this year.
▪️ 21.8% tenants paid two cheques in Q3 last year as compared to 12% in Q3 2020.
▪️ 7.3% tenants paid three cheques last year which dropped into 2% this year.
Views of Lynnette Abad on Rental Trends
Lynnette Abad, the Director Of Research & Data at Property Finder, said that the fear of not having enough space and lack of outside space has become the new reality many people faced since the pandemic situation had raised. She also added that, all of us started to spend more time in our homes. We worked from home, our children were home-schooled, and we chose to stay home more, cook homemade meals and avail delivery services. All of this prompted a new trend and people started to want more space and outside spaces for their family. People also started to migrate away from densely populated city centers and towards the suburbs. All of this has led to an all-time high for transaction volumes in Dubai for Villas/Townhouses
Top areas for secondary (ready) Villa/Townhouses in October 2020
According to Property Finder, the top areas for secondary (ready) Villa/Townhouses in October 2020 were:
▪️ Nadd al Sheba - 11.8 %
▪️ Town Square - 7.8 %
▪️ International City - 6.7 %
▪️ Arabian Ranches - 6.4 %
▪️ Dubai Hills Estate - 5.9 %
Percentage of transactions
▪️ 39 % of the transactions were for 4-bedroom units
▪️ 34.7 % for 3-bedroom units
▪️ 14.8 % for 5-bedroom units
Apartment rents falling, but villas rise. The key theme in the market is affordability.
Views of Aditi Gouri on Rental Trends
More cheque payments are linked with apartments as opposed to townhouses or villas and people are progressively looking to upgrade to villas or townhouses, said Aditi Gouri, the Head of Strategic Consulting & Research at Cavendish Maxwell. She also said, there was a clear shift in demand from apartments to townhouses and villas, as people seek larger living areas with outdoor spaces, after the movement restrictions ended in Dubai. Landlords have been able to successfully demand one cheque payments and even increase rents in some cases with the raise in demand outpacing supply and availability in case of villa or townhouses. The trend in the local rental market is that tenants pay four quarterly cheques.
Note: The Cavendish Maxwell data revealed that 30.4 % of tenants were paying four cheques in Q3 last year, which dropped to 18 % in Q3 2020.
Local property trends show that since the outbreak of the pandemic, tenants in Dubai are increasingly shifting to larger apartments and villas due to lockdowns and they need more space for their families as they work from home.
Aditi Gouri of Cavendish Maxwell said, there has been a sharp increase in demand for townhouses or villas, which has allowed landlords to demand payments in fewer cheques from potential tenants especially as a result of job losses across the board. She said rental trends are quite contrasting for apartment and the villas/ townhouses segment. She also added that the apartments are experiencing falling rents and increased supply as more units hit the market and people choose to upgrade to villas/townhouses. It is a tenant’s market with landlords offering discounts and providing flexibility with payments. Meanwhile, the opposite is the case for villas/townhouses for reasons explained above.