Throughout human history, pandemics have had profound economic effects; they are the inevitable attendants of financial progress. Although interconnected trade networks have advanced the cities, they have made them more vulnerable to catastrophic events and pandemics. The effects of this pandemic aka coronavirus will be very different from those of past pathogens, considering other factors such as availability of treatment and knowledge of disease in place. So, once again, the world is trapped in a crisis that seems to leave long-lasting impacts. While there are horrors and panic surrounding the world, the UAE’s landlords have given some relief packages to the tenants to lessen their burden. Even though there isn’t that serious of an impact on properties in UAE and businesses alike. However, direct rent cuts have not been offered by them.
How did This Happen?
More landlords in the UAE, including those who are leasing offices have started giving relief to the people during the COVID-19 period by waiving off rents for a period of three months. Uzair Razi, Chief Investment Officer at Global Capital Partners, has a say in this regard. According to him, landlords had understood the nature of the problem that tenants were facing. They had tried to overcome the load by
- Allowing delayed payments
- Offering extended leases
Nobody knows how this happened. Whether it is due to the absence of any alternative option or positive spirit infused by the government’s stimulus policies, landlords have extended a helping hand to struggling tenants.
Who Is Up for This?
Dubai-Holding & Meraas:
This was the first group to announce the relief package to the tenants. The group gave Dh1 billion package to their associates and clients to increase development in the areas such as Bluewaters, City Walk, and La Mer.
Equally important is the Al-Futtaim group which has decided to give relief to the eligible tenants for three months. This decision will be particularly applicable to those tenants who work at Dubai Festival City Mall. Meanwhile, the group also owns the recently opened Festival Plaza in Jebel Ali.
Sharjah based Alef Group:
Sharjah -based Alef Group has given a Dh10 million package to help retailer-tenants working in the developer’s six malls. This financing will help cover the economic loss faced by the tenants due to the lockdowns.
This group has set up a relief package of Dh230 million for its clients due to coronavirus. The purpose is to reduce the financial burdens faced by the business and individuals alike.
Because of the pandemic, the prices of the properties have also decreased to such an extent that the sale of the properties, as well as apartments on rent, have been affected a lot. Another sector that is affected by this coronavirus-led slowdown is retail. As the consumers have put off all non-essential purchases due to the strict measures taken by the government, this sector is bearing the brunt of this crisis the most. Now they are dealing with the decrease in sales starting from the first quarter of the year. Moreover, there will be a slow recovery after this pandemic is over.
What Renters Have to Say?
Cyriac Varghese, who is a General Manager at Sky Jewellery, and has a rental bill of Dh15 million annually said that even before the virus outbreak reached a certain level, we had sent letters to the landlords, requesting them to give them some leeway regarding rents. As the matter was getting worse, so were, our requests. According to him, markets need a rent freeze as well as rent reduction at the time of contract renewal. The measures taken by the government to address this matter are remarkable; now it’s time is to adopt the top-to-bottom approach.
The current negotiations between the tenants and the landlords are focusing on these areas:
- extended rent-free periods
- capital contribution to fit-outs
- shorter notice periods with a limited penalty
During these difficult times, the property in uae is still got potential to give best ROI to the investors. The need of the hour is to understand the situation and lessen the burden from those who have been affected by the pandemic the most.