August 13th, 2017 by Own A Space
Dubai has homes that remain unoccupied for most part of the year. They are referred as ‘shadow inventory’. These homes are there in Dubai since the freehold ownership started. As per a recent study, shadow inventory is added back to the rental market in Dubai as capital appreciation is on decline. Their owners are of 2 categories that are- 1) who bought it for investment purpose and waiting for the ideal time to quit & 2) who bought it as holiday home and don’t want to deal directly with tenant.
The shadow inventory has increased ever since. However, the units still covers a small percentage out of the total. Five to 6 years ago there were more empty villas as compare to right now. These are not just handed over. They are some years older and never lived in. these also involve homes that have not been rented or sold for a long span of time. These residential units are going through closure and are owned by bank or government entity to be auctioned at later stage.
These properties are situated at prime areas like Palm Jumeirah, Dubai Marina, Downtown Dubai, DIFC, etc. These areas were launched with high initial investment in Dubai. Shadow inventory is often found in the form of apartments in Dubai.
Picture Courtesy: answersafrica.com
The high end locations have suffered the most declines in the capital during the three year market correction. Those who bought the homes are waiting for the ideal time to come to terms with the fact that they have to wait a bit long than they thought. Global economic situation is uncertain. All the owners are aware of this and this is the reason why they are looking for tenants or selling the property.
A popular trend is to give out on short term let or holiday let. This way the owner gets increased returns and more flexibility with the availability of the property. Price is the prime motive for those who are selling the property in Dubai. Sellers are more flexible and are being less speculative.
Picture Courtesy: i.ytimg.com
Mostly buying with a mortgage and looking to live in it. The days of quick profits are long gone, so most investors are not buying these units. The owners not only suffer from rent loss, but also incur annual service & maintenance charges. A bit of money is pumped into each property annually. However, it contributes a small amount to the total rent decline in Dubai.
Get Connected To Us On Social Media:
Google Plus: https://plus.google.com/+OwnASpaceDubai