Dubai house prices surge, while rental growth slows

Posted by: Tanib Tuesday, 4 November 2008 6:01 PM[UAE] - United Arab Emirates

The cost of renting in Dubai is getting out of hand, especially if you do not get a huge housing allowance from your company. This is affecting people across the board, the Government are clamping down on people sharing villas and apartments, where are these people supposed to go? Even studios are an average price of AED 60,000 per year and for some people that is more than either half their salary or even exceeds their salary!! How can it be possible to live alone, save money and have any kind of decent life here if you have to pay this much out of your salary just to have a roof over your head, especially with the rent payment schemes as they are, either one, two or three cheques, wherein the rest of the civilised world you can pay monthly. There is going to be a massive gap in the workforce if this carries on like this!!!

Posted by: Bloke Tuesday, 4 November 2008 5:47 PM[UAE]

I am from the positive side of the fence on the property price issue and I think only in two to three months time will we really see what direction Dubai goes. I think a lot of it comes down to whether speculators hold their nerve or not. Market confidence is a key factor.

Posted by: muhammad irfan Tuesday, 4 November 2008 5:07 PM[UAE] - U.A.E

I wish the rents stabilize but the problem is the landlords have made it a habit of increasing the rent between 15 to 25 % on an average. The property market might be going down but not the rental market as the demand is still outstripping supply. On average two families live in a two bedroom flat in the UAE. Exceptions are there, like the high earning people, but they are not even twenty % of the total population. The rents should fall by at least 60% to make it affordable.

Posted by: Simon Tuesday, 4 November 2008 3:58 PM[UAE]

The article is out of date. Factually there 'MAY' have been those growths but 4th quarter, if the truth is told, should show falls off 50% in Jebel Ali, 25% Palm Jumeirah (Villas), Marina 20-40% depending on the development etc, etc. I own a real estate company and these are the true prices out there...lets say the 'norm'. Anyone can find an example of a property sold that hasn't fallen in price but the vast vast majority have. I have a vested interest in saying the opposite but the facts are the true. Brokers are slashing their sales staff by more than half and cutting basic salaries. Developers are following suit with more to follow and one bank has forced staff in their mortgage depts to go on 3weeks unpaid leave. Things are changing very fast and behind the scenes companies are taking immediate actions. These are the facts. If the 'captains' of the ships are worried...when do you think property owners should be? To be fair I'm very happy with the correction taking place because prices have been far too high for far too long...without justification. Prices have been ramped up by greedy profiteering developers and commission hungry sales agents who know nothing about real estate. The market will be better for the correction in the long term. Sure there are going to be losers but this was never a 'one way' ticket to retirement. Thise who dived into the market recently didn't take into account a strengthening $US or the credit crunch and so will get hurt most...but they should have looked a little further than the 'goldfish' bowl of Dubai before purchasing something they expected a foreigner to take off their hands further down the payment schedule.

Posted by: homeless Tuesday, 4 November 2008 1:26 PM[UAE]

The problem of soaring rents in Dubai was made worse by the publication by the government of what the maximum rents in named developments should be, as the same document contained 'advised' minimum rents. Of course the effect of this was to push rents up at least to the minimum, which for my flat was a jump of 80,000 dirhams. Now we hear on a daily basis of landlords kicking people out of flat on the pretext of a family member moving in, whereas in reality they want to re-rent at the higher level. This crisis, and it is a crisis, was engineered from above. Sadly, it will take market forces to correct the situation and that will come in the form of a mass exodus. With the current financial crisis now hitting Dubai with projects being cancelled and contractors being laid off, it will only be a matter of time before rents tumble. inshallah