Now that I am two-and-a-half months away from ending my lease contract for my studio flat at Discovery Gardens, the idea about checking out the property market for the trend in rental has become more pressing. I am reminded of the number of times I went through the same process of checking and scaling the residential property market in the past and it surprised me to know that my length of stay in Dubai has far been exceeded by the number of times I have transferred residence. In December 2004, from a 2-bedroom flat in Al Twar whose rental was around Dhs45,000 per annum, I transferred to a 3-bedroom flat in Port Saeed for Dhs65,000 per annum. After a 10-month stay, we were booted out by the real estate for the reason that we were not 'one family' as defined by the lease contract. From there, in Oct 2005, we transferred to a 2-bedroom flat in a new building in Bur Dubai for Dhs65,000 plus a Municipality tax that to our computation would amount to 8-9% of the annual rent. As we could barely manage the monthly rental in view of the fact that the rent kept on increasing while the salary was at a standstill, we all had to eventually vacate the flat and go separate ways. I found myself thereafter renting an old room at a very old villa in Jafliya near the DWTC roundabout and close to the Al Diyafa, Satwa area. To help me manage the expensive rent at Dhs2,800 per month, I had to put up a makeshift divider, place a one double deck bed and get 2 bedspacers. For quite sometime, things were going quite well but came summertime, we encountered frequent cut of the electricity brought about by the periodic shutting off of the circuit breaker due to overload. There were around 28 rooms that constitute the villa in that compound. A few months after, a bigger and major problem came. We were raided by Baladiya twice ordering us to leave as we were not a 'family' and that the area was designated only for 'family'. I remember that after the first raid, we had to tear down the makeshift division and dismantle the double deck bed as ordered and then the following day had to put them back again. During the second visit of the Baladiya, finding the makeshift division and the double deck back again, we were ordered to vacate the place. We were told to look for a residence in a place where 'bachelors living together' would be allowed. It got us all very disappointed and enraged as we somehow felt that the bachelors' need for shelter, which is very basic, was taken for granted by the government. We could only ask each other where the Dubai government wanted the bachelors to stay and what they wanted them to do given their predicament.
Eventually, I found a 2-bedroom flat in a new building in Al Qusais for Dhs104,000 plus a Municipality tax that was pegged at Dhs760 per month. It was April 2008, the peak of property boom in Dubai and a very opportune time for the greedy property owners and real estate agents to extort money from helpless expats from the lower income bracket. To help me manage the exhorbitant rent, I had to sub-lease one room and get bedspacers too. Sadly, the room tenant and some bedspacers did not pay their rent thereby leaving me struggling to fund the quarterly checks that amounted to Dhs26,000 each. After a year and two instances of bouncing checks, I had to end the lease and look for a cheaper place to stay. This was in the first quarter of 2009, around 4-5 months after Dubai was hit by the financial crisis. This time, the property rental was on a continuous downward trend and some agents were amenable to a 12-check payment scheme. With my niece and friends, we found a 2-bedroom flat in Al Nahda, Al Qusais for Dhs70,000 and under a 12-check payment scheme. Halfway through the one-year lease contract, we noticed that the property rental was on a continuous decline still and we could get a 2-bedroom flat in a more accessible area for a much cheaper rent. However, a clause in the tenancy contract made it difficult for us to decide to do so as the clause stated that in the event that we pre-terminate the lease contract, we would be paying 10% of the total cost of the lease, which was Dhs7,000. The property owners found a way to protect themselves again and minister to their selfishness. By December of 2009, I had to leave my flatmates and stay in a flat maintained by my employer in The Gardens. By April 2010, I had to move out and eventually found a studio flat at Mogul Cluster (the remotest from the entrance) in Discovery Gardens for Dhs40,000 through a 12-check payment scheme. However, after a few months, I found out that the rental for a studio flat with a wider floor area and in a more accessible location is much much cheaper and they also have a 12-check payment scheme. But if I leave my current place, I would have to pay a penalty charge with Al Nakheel Asset Mgt.
Come Apr 2011, I really have to move out as I anticipate that most likely, Al Nakheel Asset Mgt. will either increase or retain the current rental. Either way, it is not practical and beneficial to me. As I have noticed in my research and in scanning the property market rental for the last few days, the rental is much lower for a studio flat with wider floor area and in more accessible location. I would have wanted to stay in my current flat as it is very tiring to keep on moving out and shifting residence. But then again, I have to be more practical.
I read in the papers a few months back that the Dubai government will make the Municipality tax mandatory for all buildings up for rent and this has to be borne just the same by the tenant and it will be pegged at 5% of the annual rental. Another burden passed on the shoulder of the helpless tenant when this should be born out by the property owner as has been practiced in other countries.
I remember talking to a finance expert 4 years ago (before the crisis hit Dubai) where he said that the Dubai property market will reach a point that it will correct itself and I suppose that time has come. I am sure property owners projected this as well, hence, they took advantage of the momentary property boom to get the most from helpless tenants the fastest they could in a short span of time. Gone are the days when propery owners and real estate agents made it very difficult for tenants through the exhorbitant rent they imposed and arrogant tenancy conditions. Now is the time for tenants to dictate on the conditions and to some extent on the rent. The property market has corrected itself and the supply now far exceeds the demand. The power has shifted to the other side of the pole. Property owners and real estate agents who do not recognize this are not grounded on reality.
Eventually, I found a 2-bedroom flat in a new building in Al Qusais for Dhs104,000 plus a Municipality tax that was pegged at Dhs760 per month. It was April 2008, the peak of property boom in Dubai and a very opportune time for the greedy property owners and real estate agents to extort money from helpless expats from the lower income bracket. To help me manage the exhorbitant rent, I had to sub-lease one room and get bedspacers too. Sadly, the room tenant and some bedspacers did not pay their rent thereby leaving me struggling to fund the quarterly checks that amounted to Dhs26,000 each. After a year and two instances of bouncing checks, I had to end the lease and look for a cheaper place to stay. This was in the first quarter of 2009, around 4-5 months after Dubai was hit by the financial crisis. This time, the property rental was on a continuous downward trend and some agents were amenable to a 12-check payment scheme. With my niece and friends, we found a 2-bedroom flat in Al Nahda, Al Qusais for Dhs70,000 and under a 12-check payment scheme. Halfway through the one-year lease contract, we noticed that the property rental was on a continuous decline still and we could get a 2-bedroom flat in a more accessible area for a much cheaper rent. However, a clause in the tenancy contract made it difficult for us to decide to do so as the clause stated that in the event that we pre-terminate the lease contract, we would be paying 10% of the total cost of the lease, which was Dhs7,000. The property owners found a way to protect themselves again and minister to their selfishness. By December of 2009, I had to leave my flatmates and stay in a flat maintained by my employer in The Gardens. By April 2010, I had to move out and eventually found a studio flat at Mogul Cluster (the remotest from the entrance) in Discovery Gardens for Dhs40,000 through a 12-check payment scheme. However, after a few months, I found out that the rental for a studio flat with a wider floor area and in a more accessible location is much much cheaper and they also have a 12-check payment scheme. But if I leave my current place, I would have to pay a penalty charge with Al Nakheel Asset Mgt.
Come Apr 2011, I really have to move out as I anticipate that most likely, Al Nakheel Asset Mgt. will either increase or retain the current rental. Either way, it is not practical and beneficial to me. As I have noticed in my research and in scanning the property market rental for the last few days, the rental is much lower for a studio flat with wider floor area and in more accessible location. I would have wanted to stay in my current flat as it is very tiring to keep on moving out and shifting residence. But then again, I have to be more practical.
I read in the papers a few months back that the Dubai government will make the Municipality tax mandatory for all buildings up for rent and this has to be borne just the same by the tenant and it will be pegged at 5% of the annual rental. Another burden passed on the shoulder of the helpless tenant when this should be born out by the property owner as has been practiced in other countries.
I remember talking to a finance expert 4 years ago (before the crisis hit Dubai) where he said that the Dubai property market will reach a point that it will correct itself and I suppose that time has come. I am sure property owners projected this as well, hence, they took advantage of the momentary property boom to get the most from helpless tenants the fastest they could in a short span of time. Gone are the days when propery owners and real estate agents made it very difficult for tenants through the exhorbitant rent they imposed and arrogant tenancy conditions. Now is the time for tenants to dictate on the conditions and to some extent on the rent. The property market has corrected itself and the supply now far exceeds the demand. The power has shifted to the other side of the pole. Property owners and real estate agents who do not recognize this are not grounded on reality.
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