There has been a rapid change in the thinking patterns of both landlords and tenants in the face of new realities in Dubai real estate. Once it was evident that the boom period was over and people began losing their jobs in the emirate, the atmosphere slowly changed from a seller's to a buyer's market. Suddenly tenants began to realize that they had the power to negotiate with the landlords who were put on the back foot. As people left the emirate, landlords were suddenly without a source of income. The problem became more worrisome as more and more people returned to their home countries. The impact was felt in Dubai as more than 70 percent of those employed were connected with the fields of Dubai construction and Dubai real estate.
In time, landlords were forced to lower their rent in Dubai or even offer food or rent free trial periods in order to lure tenants. Other renters living on the outskirts of Dubai in Sharjah or Ajman got an opportunity to rent accommodation within the city and did so on better terms. Hotels were also forced to lower their rates and many in fact cut their rates in half just to ensure that business was coming in. One negative outcome for migrant workers and expatriates is that many of them were given a choice to accept salary cuts or leave their jobs. Many were not even given any bonuses or salary increments last year. Such is the cost that one has to bear sometimes just to survive.
The fallout of the recession and slowdown in the Dubai real estate and construction sector has affected nearly every sphere of life in the emirate. From taxi drivers to retail stores, diners to leisure providers, clothing store to shopping malls, everyone has experienced the reduction in business transactions. There is an atmosphere of uncertainty that prevails and reflects itself in spending activity as people have decided to hold off on big purchases- they became more concerned about layoffs and the possibility of having to go back home.
In short, not only are residents spending less, but tourists who accounted for a large portion of consumer spending in Dubai have also cut back on their travel to the emirate. In the opinion of experts, the businesses that will be least affected are the ones that enjoy a prime location and have the best reputation for value. Demand for luxury items will definitely take a greater hit compared to basic commodities like clothes and food which are necessities.
Another theory being put forward is that businesses are entering into a value cycle and as such the downturn presents a great opportunity for products in this category. Already retailers in the low-cost segment have taken a hit because many of their core customers have lost their jobs due to the real estate crash.
Businesses from hotels to leisure parks would be better off developing sales programs and promotions around different events. That is what would lure customers to the emirate once again. But all in all, Dubai would do best if it looks at its labor laws, employment conditions and considers how to make them more conducive to migrant workers and expatriates.
About Author Mark Castellino is a seasoned traveler, educator and freelance writer. Fluent in many languages, he spends his time in Dubai working at Dubai Media City. Mark often comments about life in Dubai especially with regard to Dubai property and rent in Dubai. He has vast experience of working in the Dubai Real Estate market.
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