2009 rental index prices revealed

zoom

RENTAL COST: While many will escape a rent rise in 2009, many others will face a major hike in prices, according to industry experts. (Getty Images)

Real estate experts warned on Tuesday that thousands of tenants across Dubai could still face steep rental price rises – despite a decree issued by Dubai’s ruler.

Sheikh Mohammed bin Rashid Al Maktoum on Monday issued a directive freezing rents on residential and commercial properties in the emirate in 2009, for tenants who renewed their contracts last year.

However, if rents are more than 25 percent below the guideline figure recommended in Dubai’s new rental index , then the freeze does not apply.

This means many expatriates who arrived in the emirate before rampant inflation took hold, face paying substantially more to renew their leases this year.

Andrew Chambers, managing director of real estate consultant Asteco told Arabian Business: “There will be quite a lot of people potentially [who will see their rent rise in 2009].”

“Those people could have been in there two, three, four, five years and historically they’ve kept it down so that they would be in line for increases. If they [rents] are disproportionately low then why not?” he added.

But Dubai's new rental index has been attacked by agents for not being representative, and failing to take account of the quality, location and age of a building.

Peter Penhall, CEO of GoWealthy.com, an online property website, said: "I broadly support the logic but there are many holes in it. It's not representative. You've got an average benchmark rental rate for areas in Dubai where there older properties as well as new ones."

Other agents said the rental index will damage sentiment in an already rapidly cooling market at a time when landlords should be free to charge rents according to the quality of the building.

Laura Adams, leasing manager at broker Better Home's head office said: "The prices for rents are way down on what landlords were getting last year. The market should speak for itself. The prices are out of date and are too simplistic."

Tim Boswell, managing director of broker Ocean View, said the index was largely 'irrelevant' given the strong market feeling that rents would fall in the coming months.

The news comes just days after Dubai's Real Estate Regulatory Authority (Rera) revealed it had finalised the rental index that it hopes will replace the need for rent caps in the future.

Rera recommends that a one bedroom apartment in the Greens should cost between 110,000-130,000 dirhams ($30,000-$35,400) a year, against 110,000-150,000 dirhams ($30,000-$40,000) in the Marina.

The price of renting a one bed flat in International City, according to the index, is 65,000-75,000 dirhams a year, whereas the same property in Jumeirah Beach Residence (JBR) is placed at 110,000-150,000 dirhams a year.

Rera suggests a five bedroom villa on the exclusive Palm Jumeirah island should be leased at between 500,000-700,000 dirhams a year. A smaller villa with two bedrooms in the Springs will cost 190,000-230,000 dirhams a year.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Rental Index
Posted by Sikander Shallwani, Dubai, UAE on Wednesday 4 March 2009 at 11:48 UAE time


I have read few comments about rental increase, most of people do not understand that the investor have put their life saving in real estate and many have bought these properties in 2007-2008 at high price which are far more than any expensive place like Los Angeles, or Tokyo.
The property I bought in Arabian Ranches with 30% down payment and balance from bank finance for 15 years. Rent simply do not cover in mortgage payment, and my property is down by 50%.
RERA should not involve much in this matter, if they want to see Dubai progress in future.
Sikander Shallwani

rents
Posted by tim, dubai, uae on Monday 2 March 2009 at 14:01 UAE time


rents have always been expensive, i paid 60k aed per year for a three bed in mirdif 12 years ago, i was only erning 12 k per month, 5k a month out of my salary was 40% ish, now you want to punish me more because i came to live here when their was nothing, long term xpats should be protected, as we took the chance on a developing country, its not a hardship posting anymore, thanks to the long term xpats.??????

High Rents
Posted by Aamir Shah, Sharjah, UAE on Monday 2 March 2009 at 11:11 UAE time


I am totally agree with Mr. Kent's comments, I have been living in UAE since 1981, and my father has seen the time when drinking water use to deliver on donkeys, till 2001-2 the rent were not so high, at least afforable, but now due the the greediness of agents, and landlords, Its almost impossible to live in comfortable accomodation with family. me and even my children has been brought up in 5 bedroom double story villa close to the beach in sharjah, and the rent was only 32000/- PA.

Rents And Banks
Posted by Anonymous, dubai, united arab emirates on Sunday 1 March 2009 at 00:45 UAE time

All i want to say is that the rents are increasing and people are just plain leaving tenants are told if u dont want to pay rent because of the increase dont pay the whole year but get out at the year end.Other than that banks arent helping after i continously kept in touch with them and whenever they called and told me to pay specific amount i would go and pay.After all the payments were made and i had got a verbal confirmation; 2 weeks later i get a call telling me that this bank has signed a case against me and when i reached there to show all the proof that i had paid off the dues they told me to forget what all i paid and pay the whole amount all over again and when i refused to do so they threatened me that they would put the security cheque in the police and then i would have to pay the whole credit card limit amount to the bank.this same issue has happened with 2 banks here in dubai.i have lost everything in paying off this bank and they casually told me to forget what all i have paid.they have verbally abused me on the phone.

i failed to pay one installment and they cashed my cheque and they cashed my 18000dhs cheque the amount was dhs8000 due.when i reached there to retrieve the remaining amount the person incharge verbally abused me in public and told me he will fine me dhs25 for every minute i stand there.when i went to the top level management they assured me they would give me my remaining amount back.its been over a year and no action has been taken.i am tired of reading about all the cries from public but no action taken by the government.They say it is recession but all they do is kill of what is left and force them out of the country.Media is the only source left for me to cry out for help.I hope there is still a heart beating in this country that would care and lend a helping hand.

View all comments (87) >>

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM