Why so many apartments in Dubai remain empty

People on the search for an apartment in Dubai are now increasingly becoming frustrated. Many apartments are empty, but a fewer are offered for rent. And rental prices are sky high, in most of the cases calculated purely on the basis of the owner’s expectations for profits, but not according to the qualities of the property and its location.

No, it is not that Dubai is facing a shortage of apartments, in particular, and residential units in general. There is actually a significant oversupply with newly built and already oldish homes, which have been on the market for the past few years.  However, in reality, nowadays it is hard to rent an apartment in Dubai for the right price.

As an experiment, we contacted a real estate agent in regard to a 2 bedroom apartment at the The Index tower in Dubai Financial Centre listed with a rent tag of 210,000 Dirhams. It turned out that accommodation in that area of Dubai is in a high demand due to the influx of money managers to the DIFC. “Good apartments are flying off the shelves,” according to the agent. Prospective tenants are submitting offers and landlords are screening profiles in order to choose who will pay them the newly inflated rents. Believe it or not, this is a common experience in the DIFC area nowadays! Some of the hottest and most importantly – available for rent – apartments disappear from the listings just in a few hours. Moreover, there are still many companies that pay accommodation allowances for their executives in one cheque.

So, you have to be lucky to rent a nice apartment in the DIFC.

It turns out, however, you don’t need any luck if you want to buy an apartment. Where one is available for rent, ten are already vacated and listed on the market for sale. At least, this is the case with The Index tower in DIFC, according to our most recent experience.

There is a reason for this seemingly contradictory occurrence.

Owners who want to sell their property are asking current tenants out, because they believe they will be able to sell it easier to newcomers who would want to move in right away. Little do they know that by now there are too many of them, who have the same “smart” thought, and the market is over-flooded with expensive empty apartments.

Various property consultancies, mostly British and some who are not even based in the UAE, have been racing during the past two years to build reputations on the back of reports about the booming Dubai property prices. Ordinary people and skilled investors believed and acted accordingly, while banks cashed in on their hopes for quick profits. And property prices increased and increased, and increased… feeding the reports with impressive numbers recording fast and remarkable, not seen elsewhere in the world residential property prices growth.

Now, distressed sales and reduced price offers begin to pop up between the classified adds. But if you really want to own an apartment in Dubai, it would be better to wait for a few months more in order to get a much better deal. Empty apartments don’t generate income for property investors, nor pay their mortgages. On the contrary, even the 6 or eight year old Downtown Dubai apartments do not seem such a great opportunity to investors any longer, because there are brand new ready to move in homes of better quality by now.