Demand Is So High That There Is A Premium For ‘Vacant On Transfer’ Villas In Dubai.
In property rental market of Dubai, 90-day notice period is customary. How about 12-month notices, though? Yes, these extensive notices releases by landlords and property owners. Because of Dubai’s extraordinary demand for built property. These property owners/sellers want to make sure that when a contract is signed with the innovative buyer/tenant. They will not have to wait for the property to be vacated by giving a 12-month notice.
These prolonged notices are being given for additional reasons. A renewal of their lease rather than looking for a new place to live may better fit their budgets. As Dubai rentals in prime and mid-tier locations have increased by 20% or more on average over the past 12 months. Given that the city’s population is growing, the majority of real estate agents anticipate this trend to last well into 2019.
The problem arises for landlords during renewals. Even if they demand a sizable increase for renewal. It is likely that the new lease will not be comparable to what they might receive from finding a new tenant. According to Richard Waind, Group Managing Director at Betterhomes LLC, “Landlords are aware that tenants who are paying lower rents are staying put.” Even with the RERA-calculated rent increases. Renting an existing apartment with all the increases may still be less expensive.
Since first few weeks of this year, a lot has changed. The majority of Dubai’s tenants at the time preferred to find new residences to extend their current leases. By this time, more homes had also been delivered. Whether in upscale Dubai Hills or the brand-new residential hotspots at MBR City or DAMAC Hills. The same was also occurring at JVC and Al Furjan’s mid-market locations. However, demand for new homes in Dubai’s residential clusters is outpacing the supply by a wide margin.
Everything Changes In Summer
The summer just passed saw an increase in more than just the temperature. By July, rent increases had significantly increased, causing tenants to reevaluate their course of action. The rush for renewal began at that point.
The Cost of “Vacant” Homes
At the same time, the demand for real estate in Dubai remained steady from the beginning of June to the end of August. Moreover, they demanded the newly purchased homes be delivered right away. So they could move in.
Less than 30% of the available villas are currently vacant on transfer (VOT), according to Waind. There are many landlords today who serve notice for their renters to vacate. Then try to sell because VOT villas will sell for a premium.
“Landlords can only give notice to tenants to leave for one of three reasons. To sell their property, to move in themselves or members of their immediate family, or make significant and necessary renovations. We are observing landlords attempting to serve notice in order to raise rents. But we advise them against doing so because they run the risk of RERA fines and sanctions.”