A rival Dubai rental index will be published next week which will recommend cheaper rents than RERA’s updated guidelines.
Although Arabian Business revealed late on Wednesday that property watchdog RERA’s (The Real Estate Regulatory Authority) new rental index entitled tenants to up to 50 percent discount on its last figures to better reflect the downturn in the market, broker Landmark Properties will release its own updated rental guidelines in a matter of days.
Landmark have not said how much cheaper its calculated rents will be. Jesse Downs, head of research at Landmark Advisory, a division of Dubai-based Landmark Properties said: “Our upcoming one will have slightly lower figures than what they [RERA] have.”
The news shows that rents in Dubai are still falling as landlords, desperate to secure tenants, slash prices dramatically -particularly in freehold zones- as job losses mount in the wake of the property collapse.
In a report last week, investment bank UBS said house prices in the emirate could fall by 70 percent from peak to trough.
Saud Masud, the analyst who wrote the note, said on Thursday that rents could plunge by the same amount.
"Rents and property prices could come down in tandem and trough around 70 percent. If yields don't change, prices go down and rents go down. Rent is the real indicator for actual demand. There is a double whammy with over supply on units and over supply from net population outflows," he said.
Leasing agents said the main trend to emerge from RERA’s new index was a much sharper fall in rents in freehold areas where expatriates are more likely own property in places like the Marina, the Springs and the Palm Jumeirah.
“Freehold [areas] are adjusting quicker because of landlord profiles. What you are finding in non-freehold areas is landlords are more stubborn with their pricing so they would rather let their units sit empty, rather than bring their prices down,” said Downs.
“It has to do with the nature of the landlord, whereas people who bought freehold might have other requirements and view the market differently. Some local of GCC investors maybe more patient and take a longer view on the market than others,” she added.
There has been weeks of intense media speculation over the release date of RERA’s new index and whether it would be completely updated to reflect cheaper rents amid the downturn, or just be expanded to include areas left out of the original survey.
Published three months ago, the first RERA index which replaced the rental cap, was criticised because it used prices from the top of the market.
Brokers and industry figures thought the guidelines for rents were too high and failed to accurately represent the rapidly cooling market, where rents and prices have plummeted.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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