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Resident relief as rents stagnate
Rental prices in Dubai have stagnated for a second consecutive quarter as the emirate’s rent cap and tighter rules and regulations take affect, property services firm Asteco said on Wednesday.
Asteco said in its quarterly report that the emirate saw “no significant residential rental increases” quarter-on-quarter in the three months to the end of June, continuing a trend that began in Q1.
Marcus Arbourne, head of research, consultancy and valuation, told Arabian Business tenants are choosing to stay put rather than move to take advantage of the “relative security” of the rent cap, which currently stands at 5 percent.
Arbourne also said authorities are increasingly cracking down on unscrupulous landlords, which has resulted in fewer tenants moving.
He said that rental price stagnation could continue in the third quarter and possibly the fourth, depending on how much new housing stock comes onto the market.
“There is a [large] volume of new stock coming to market and when that does... it will be leased at market value [rather than restricted by the rent cap].
“There has not been that huge delivery of stock to the market yet, that’s coming over the next 12 to 18 months and will certainly have an impact on rentals. You will see significant rent rises.”
Asteco said year-on-year rents in Dubai climbed by almost 22 percent, driven by areas such as Sheikh Zayed Road, which recorded the highest annual rental growth of 51 percent.
It said Bur Dubai and Ghusais followed close behind with yearly rent increases of 42 percent and 40 percent respectively.
Other areas such as the Greens, Satwa, Muraqqabat and Garhoud saw around 10 to 15 percent year-on-year growth in rental rates over the second quarter of 2007.
Downtown Burj Dubai, Sheikh Zayed Road, Jumeirah Beach Residence and Dubai Marina recorded the highest rents, with two-bedroom apartments renting for between 140,000 dirhams ($38,000) and 220,000 dirhams a year.
The lowest prevailing rents continued in International City and Deira for studios and one-bedroom apartments.
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Comments 1-10 of 10
Posted by rh on 27 July 2008 at 00:31 UAE time
I've had to threaten my landlord with lawsuits for the three years I've been renting to keep the rent increase to 7 then 5%, this year is my third and last and I'm dreading my next move - it'll be an extra 40K I'm going to have to pay up - in one cheque that is.
What I really don't understand is how rent is still increasing but what is increasing even more is the number of "TO LET" signs! there are about four or five building here in Barsha that have been empty for at least 6 months - and then the agents tell you "all has been rented"
What this city needs is a body who will act as the one source of information on apartments available for rent. There are plenty of places for rent, you just can't know where they are!!!
The day will come when the bubble will burst.
Posted by sid, Sharjah on 25 July 2008 at 15:10 UAE time
We've had our rent in Sharjah increased every year since 4 years ago, when we moved our new villa. It's always been between 10-13% per year, which we could handle. This year, after much talk and negotiating, it was increased by 18%.
I wouldn't call that 'stagnating'
Posted by ian on 25 July 2008 at 11:42 UAE time
I can only speak of Dubai and the thought that I shall be seeking alternative accommodation in the near future fills me with horror.
Not only are the house prices criminally over-inflated - for extremely poor quality construction but', we have speculating, greedy, individuals called 'landlords' appropriating the hard earned wages of people looking for a roof over their heads.
Time is long overdue that the various 'watchdog's actually bared their 'teeth' and pulled all involved into line. The problem might not be so prevalent if there were less individual private landlords as landlords with large portfolios (Companies) could probably be policed better than the individuals and their brokers who also seem to earn their money easily (I think in the real world these 'people' are called leeches')
Posted by Nickyp on 24 July 2008 at 18:13 UAE time
Resident's relief? Who made that headline up? How many residents did he/she interview? I have just had the typical 'evacuation' notice: after asking "why, and come on, what do you really want?". Result: 80% increase to my last rent. Stagnating? Don't talk rubbish.
Posted by surjit rai, Dubai, UAE on 24 July 2008 at 17:51 UAE time
I have been in the market to locate new lease as current landlord not willing to renew the lease I been in for 3 years.
In a day, I called about 20 real estate/agent to view lease in my budget. Each call was a disappointment as the price is out of reach. Out of the 20 calls, only 2 agents called back.
First 4 weeks (June/July), being in the market, the price increases every week. The cheques number has reduce to ONE ONLY or ONE YEAR LEASE ONLY.
Now I am in the sixth week, still looking....3 bedroom, 2 carpark, 2 cheques, aed200K.
The article in your paper today with the real estate input is very much out of touch. The article clearly provide false information to the public. Stop this foolishness.
I would suggest the government to 1% increase in rent next year, minimum of 4 cheques, able to break lease no matter which year of lease, one or two months notice without any penalty charges, reduction in rental, more car park space, more free green park, reduce house fee...etc. Yes, i can go on.
So, what now, I had my say. Its your turn. Please public, get on your computer, fax, phone, utilise the media to inform the government. ITS TIME.
Posted by Teacher, Dubai on 24 July 2008 at 16:25 UAE time
I'm not certain where this information came from with regards to the rental prices not going up. In the last three months I have seen villas go from 150,000 dirhams to 200,000 dirhams. My friend is leaving Mirdif as there villa is going from 175,000 to 250,000.
It's worse by far.
Posted by Nafees Ahamed, Abu Dhabi, UAE on 24 July 2008 at 14:31 UAE time
I am concurring with the comments posted before.
Rent cap has helped the prevailing tenants and not the new tenants. there is lot of unscrupulous activities in the market whereas new tenants have to go through hardship even to the extent of paying "key money". To add to this comes the "Evacuation Strategy" followed by the landlords.
The rent cap did something. Still, applying the principles of Economics, the Demand and Supply theory works. Now the major problem is the supply. Digging further on this subject, what is needed is LOW-COST housing to serve the needy market. I am quite sure the major developers and real estate businesses would not agree to do this since the margin is low. Rather, I view it is the duty of the government to interfere to regulate this industry. The news of new supplies is encouraging, but, is it again one bed room at 100K!. We have to wait and see whether the market forces will work it would be man-made strategies of the landlords!
In my view, lack of accommodation for middle class as well the lack of a good traffic system are not signs for a healthy economy.
Posted by Rainigade, Dubai, UAE on 24 July 2008 at 12:35 UAE time
The experience posted by SZRAK are not limited just to the towers on Sheikh Zayed Road. We have experienced the same in Al Barsha. Just a year after we moved in, the uniformed, polite security guards are gone, the sauna is permanently not working, the air conditioning in the common areas is switched off, the pool is "under renovation" for the last FOUR months and filled with murky green water and there are weird, smelly, shady men hanging around the building all the time.
All this - due to a change in property management companies.
At the time of contract renewal, we were told the management company would be changed. The new company then pretended like they were doing us a huge favour by not increasing the rent (whereas they cant after the first year - its a brand new building).
We were also instructed to pay in two cheques, instead of four and when we protested, we were told that if we didnt comply then our landlord would renew the contract now, but give us notice in two months.
Voila. Please don't tell me RERA is here to help or that landlords don't get around the rules.
There's no such thing as stagnating rents. The situation just keeps getting more and more ridiculous!
Posted by Anthony, Dubai, UAE on 24 July 2008 at 08:30 UAE time
Surprised to read that apparently rents stagnate. Don't see much of this in reality. Type 4 in Springs has gone up the past 9 months from 140k to 200k, type 3 from +/- 170k to 220k and type 2 from +/- 200k to nearly 300k !!! I would call this a scandalous development rather than a stagnation. The quality of the houses is very poor, that makes the high rent even more ridiculous !
Posted by SZRAK, Dubai, UAE on 24 July 2008 at 05:35 UAE time
I'm glad to see that things are getting better overall. Although I'm not totally convinced.
Things in my view have been getting worse as landlords at prime areas like Residential Towers on Sheikh Zayed Road, are adopting alternate routes to get rid of tenants, especially long standing tenants in a effort to replace them with high-paying new tenants, they are resorting to various techniques, including:
1) Harassment by replacing Real-Estate Management companies with low quality landlord's personal Security Staff and giving them marshall/police like rights to abuse the privacy of tenants.
2) Withdrawing support services like maintenance of Washing Machines and Fridges, now tenants are charged heavy fees for these services and godforbid replacements.
3) Relaxing the fixing of Air-conditioning, elevators, causing undue convenience to the tenants.
4) NO Customer service at all
5) Ban on Visitors, and half baked security measures
The above seem to be in place to provoke a confrontation from the Tenants, or downright dismay forcing the tenants to leave.
The tenants remain largely unaware of their rights. Now we hear about RERA coming to the rescue, but on a closer look reveals huge fees for raising a voice, discouraging most tenants already pressured under the rising cost of living, from filing a complaint. Add to this the fact that the buildings are owned by wealthy landlords. All in All not too bright a picture!
Maybe someone can answer this:
Are tenants allowed to form an association or a group, to discuss and resolve such issues as a team?