Tuesday, February 09, 2010

Developers prefer renting out completed units on furnished basis

Dubai developers are considering renting out their new units on furnished basis to generate immediate revenue, real estate analysts said.

Few developers will want to convert their new developments into furnished apartments on short to medium or long-term basis, given the current market conditions, said Mohammed Nimer, CEO, MAG Property Development.

This will help in immediate revenue generation for them, rather than leaving their buildings without tenants. The furnished apartments have high rental value due to higher investment value.

The Executive Director of ETA, Abid Junaid, said that his company would be converting a project due for delivery during the third quarter of 2010, into a furnished model, and has hired Star Hospitality, to manage and offer services to the project.

The project, namely Grandeur Residences, located along the Palm Jumeirah, will comprise single, double and triple bedroom apartments and beach front villas. The highest floors of each block will house four exclusive penthouse suites, with private access to each via the spiral staircase to the terrace.

According to Junaid, the expected rate of return for such project is around 8 percent per annum, as a developer, but, as of now, it is about 6 percent, depending on occupancy and room rates.

According to real estate agents, the rentals for furnished apartments are 10 to 20 percent higher on an average than unfurnished apartments. Given, the current situation in Dubai real estate market, several investors have been prompted to look at acquiring furnished apartments for short-term leasing.

According to Gibran Bukhari, Sales Manager at Coldwell Banker, this year several individual units will be converted into furnished apartments.

The Sales Director of Elysian Real Estate, Robert Macnair, agreed that furnished property generated 15 to 20 percent premium over a typical unfurnished property.

For instance, a single bedroom Shoreline apartment on the Palm Jumeirah will fetch Dh.150,000 per annum by way of rent, while a similar unfurnished apartment will generate about Dh.120,000 per annum.

Better Homes, a prominent real estate agency, said that rents for furnished apartments fall in the range Dh.5,500 and Dh.8,500 per month.

1 comment:

Ann Julie said...

Renting out completed units on furnished basis would prove expensive for tenants as they will have to pay higher rent as compared to unfurnished houses.