Who has the supply and who has the demand for property
The fickle nature of investing in the buy-to-let market is amply demonstrated by the different situation landlords in the UK and Dubai are experiencing at the present moment.
Landlords in the UK express their confidence in the market with each passing survey. Rental yields on average are going up and void periods are going down. In and around London it seems as though many residential landlords are falling over themselves in the rush to purchase landlord insurance cover on the new properties they have bought at knock down prices. Even the new limits soon to be imposed on housing benefit can’t dampen their enthusiasm.
A greater supply than there is demand
What a different story in Dubai! Owners are desperately trying anything they can to attract buyers or tenants to take an interest in their property. Some industry experts reckon by the end of 2011 there may well be up to 100,000 properties waiting for tenants. That is one heck of a void problem in one city, and apparently the situation in neighbouring Abu Dhabi is not much better.
Landlords desperate to acquire a tenancy for their property are offering better deals day by day as the competition gets fiercer and the letting price lower. Many landlords are now offering free TV and internet deals included in their rent and others are even going so far as to offer re-location fees to anyone willing to move into one of their properties. Any vacant property that a landlord owns ins’t a profitable one.
The backlash on estate agents form online advertising
Letting agencies and estate agents are also losing out as landlords are cutting them out and resorting to advertise directly on the internet. The situation is bleak and looks set to get worse before it gets better.
With prices tumbling some landlords are thinking of withdrawing their properties from the market in the hope that a cut in supply will generate higher rental yields but in the short term this policy seems doomed to failure. Experts expect the current situation to last at least 12 months and many anticipate the market won’t find the “bottom” for even 2 years.