Why more Dubai tenants are paying rents in one cheque now

The number of tenants in Dubai wanting to pay their rent in one single cheque has increased while those making payments in two, three or even four cheques have declined in the third-quarter of 2020 as compared to same period last year.

Data showed that number of Dubai tenants paying one cheque have increased from 31.5 per cent in third quarter last year to 63 per cent in Q3 this year. Similarly, 21.8 per cent tenants paid two cheques in Q3 last year as compared to 12 per cent in Q3 2020. While 7.3 per cent tenants paid three cheques last year which dropped to mere two per cent this year.

Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell, said more cheque payments are associated with apartments as opposed to townhouses/villas and people are increasingly looking to upgrade to villas/townhouses.

“After the movement restrictions ended in Dubai, there was a clear shift in demand from apartments to townhouses and villas, as people seek larger living areas with outdoor spaces. With the increase in demand outpacing supply and availability in case of villas/townhouses, landlords have been able to successfully demand one cheque payments and even increase rents in some cases,” said Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell.

The dominant trend in the local rental market is that tenants pay four quarterly cheques. But Cavendish Maxwell data revealed that 30.4 per cent of tenants were paying four cheques in Q3 last year, which dropped to 18 per cent 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.

“The fear of not having enough space and lack of outside space has become the new reality many people faced since the pandemic started,” said Lynnette Abad, director of research and data at Property Finder.

“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 centres and towards the suburbs. All of this has led to an all-time high for transaction volumes in Dubai for Villas/Townhouses,” she added.

According to Property Finder, the top areas for secondary (ready) Villa/Townhouses in October 2020 were Nadd al Sheba (11.8 per cent), Town Square (7.8 per cent), International City (6.7 per cent), Arabian Ranches (6.4 per cent) and Dubai Hills Estate (5.9 per cent). 39 per cent of the transactions were for 4-bedroom units, 34.7 per cent for 3-bedroom units and 14.8 per cent for 5-bedroom units.

Apartment rents falling, but villas rise

While affordability is a key theme in the market, especially as a result of job losses across the board, Aditi Gouri of Cavendish Maxwell said, there has been a sharp increase in demand for townhouses/villas, which has allowed landlords to demand payments in fewer cheques from potential tenants.

She said rental trends are quite contrasting for apartment and the villas/ townhouses segment.

“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,” Gouri added.