Major cities have seen a significant migration of residents during the Covid-19 crisis, with criticism levelled at those leaving their primary urban dwellings for more isolated locations – be that in the form of family homes, second homes or rented accommodation.
In the UAE, migration centred around air travel, with the nation’s Health and Community Protection Ministry announcing on 5 March that anyone who travelled abroad could face quarantine upon their return.
For letting agents in the region, a primary sharp decline in interest during the first wave of migration has, they say, been followed by a second wave – of visitors and residents with financial means choosing to quarantine in more isolated, spacious properties.
However there are still hurdles to overcome, from the viability of viewings during the shutdown, to reduced incomes affecting prices potential renters are able to pay.
Below, four experts – from founders of property management companies to high-end letting agents – discuss the state of the sector right now and their advice for tenants and landlords.
Harry Tregoning, managing partner of Tregoning Property
All agents are have had to stop viewings since the 24- hour disinfection drive has started. This obviously has caused most existing prospective customers to stop their search in their tracks. However business can be undertaken and the Dubai Land Department recently reported Dhs1.5bn of transactions in a week. Off-plan sales are obviously relatively unaffected as the finished product in not available to be seen. The sales secondary market can still operate and Al Manara Real Estate Trustees are offering an online service to complete deals.
Rental business is harder as viewings are not allowed. We have some virtual tours but most customers need to visit a property to get a feel for it and to see it in daylight. It is possible to complete a rental agreement as we have managed it. The paperwork has been done by soft copy, the payments by transfer and Ejari can either be produced by a larger landlord or by going to ejari.ae. DEWA then follows automatically online.
Many of the larger landlords have not yet made announcements on their residential offers in light of the situation. Nakheel, Wasl and Al Futtaim are some big landlords who have already offered attractive offers to their commercial customers. Residential deals are less forthcoming although Sultan bin Ali Al Owais Real Estate announced a 45-day rent waiver to assist its tenants manage the economic effects of Covid-19. I know one private landlord who has given a two month rent free period to his tenants and I would hope more will follow to support their tenants in these hard economic times.
Tregoning Property has also teamed up with Candoo, a local maintenance company, and supplier to large hotel chains to sanitise, disinfect and protect the property from Covid-19 and other potential infections prior to moving in. We are offering this for free when customers rent or buy a property with us until the end of May.
Personally I believe that as soon as we are able to move around the city again, there will be strong demand in the residential rental sector as people are hanging on for viewings. Some naturally want to move as their contracts end but others have reduced incomes or no job and they are looking to cut costs and fast.
Chris Whitehead, managing partner at Gulf Sotheby’s International Realty
At Gulf Sotheby’s International Realty, we manage high-end short-term property on behalf of our clients, and have a partnership with the local luxury vacation rental firm Maison Privee.
All our villas are fully furnished to a very high standard and located in Palm Jumeirah. Before the crisis, they were running at around a 70 per cent occupancy. Now, we are at 100 per cent.
The reason for the increase is that most clients that take these villas are generally high-net-worth individuals that are based and live temporarily in Dubai. For example, they might have been renting two floors in the Burj al Arab for two years, or a large apartment in a Downtown location such as The Address. In my opinion, we find that it’s those types of clients, who were based in hotels, that have moved into short term properties to take advantage of the isolation and social distancing that they offer.
Some sectors of real estate have really spiked and some have really suffered. When hotels went into lockdown, many long term guests checked-out and relocated to short-term villas. Our demand went up almost overnight.
There were also quite a few high-profile families that were in Dubai on vacation who were either affected by the lockdown at the airports or felt safer here, and they have moved out of hotels and into high-end, short-term accommodation.
Vinayak Mahtani, CEO and founder of bnbme
We’re a holiday home management company that has properties throughout Dubai, ranging from studios to villas.
Our typical visitor demographic has changed quite a bit. It used to depend on the time of the year, but obviously that’s out of the window at the moment.
To be honest, business is good. We’ve done quite well. Over the last three weeks, we had a lot of people who couldn’t get out of the UAE who rented our properties. Obviously now that’s started to filter out, with a lot of them leaving, but what we’re seeing is Dubai residents booking our properties because they want larger places to live. We’ve had a lot of families booking our villas with private pools, because it can be frustrating with everyone working from home every day.
In terms of pricing, for a four-bed villa on the Palm you’re looking at Dhs60,000 to 90,000 a month, a villa in Emirates Hills would be around Dhs150,000, and penthouses in Dubai Marina with a private pool can go for Dhs60,000.
Our larger properties with private spaces like pools are all gone, so we’re actually looking for more inventory.
We haven’t had a single reservation from Airbnb in the last two or three weeks, but our clients who have previously booked with us over the summers have come back and taken larger properties from us for a month so they can benefit from the space. Our website and engaging in social media has also helped us – anything from direct marketing to local Whatsapp groups for mums.
My advice to our property owners – including 60 to 70 who live in Dubai – is not to panic. I think the worst thing they can do is rent out their property at an extremely discounted rate just because they’re on annual leave.
The property market isn’t always going to be like this. There will be a boom in tourism and in Dubai property, and I personally believe we’re going to spike towards the end of this year and the beginning of next year. My advice is to be creative and not to rent out at crazily low prices, because we see some of that happening at the moment.
Anna Skigin, founder of Frank Porter
As a property management company for AirBnb and holiday homes in Dubai, we’re seeing demand for longer-term stays. Whether its tourists who are unable to leave or residents staying in hotels, they all want a place that has a kitchen and a place to do laundry. It’s these types of guests that have been transitioning into our apartments.
Tourists have dropped significantly but we are seeing places being booked up for two or three months, so that has balanced things out a little. Our usual occupancy rate for March and April, our high months of the year, is 85-90 per cent. Now we’re seeing 55 to 60 per cent, which is still not bad. When everything started and lockdown was initiated we made a plan for if occupancy was at zero per cent – our worst-case scenario. But surprisingly, it hasn’t been that bad.
People that were living or staying temporarily with someone have moved out to get their own spaces. We’re also seeing people who just moved to Dubai for work. They’re not looking for long term places right now; they’re looking for temporary accommodation until this quietens down.
It’s very much a transitional point for people right now. Unfortunately in these moments you do see a lot of predatory behaviour, including a refusal to negotiate with tenants.
All of our owners have been quite understanding that people are on very tight budgets at the moment and for places to be filled, the rate has to be reduced below what it normally would be at this time last year.
Our price-point right now is very attractive to people, so they’re booking and extending. We dropped the prices in half for some places, and obviously we’ll reduce the rate if people are booking for two or three months. People are messaging us privately and explaining their situation and asking what negotiations can be made. But it has to be fair, to both the owner and guest.
Villas and freestanding buildings that are completely isolated are very popular, but I think it really depends on what that person needs – I’m not seeing a huge trend of one area over another, it depends on the situation and the price.
Our hope is that, because the UAE has acted much quicker than many other countries, this will hopefully pass quicker here, and borders are going to open up.
Source: Gulf Business