By Alex Delmar-Morgan
UPDATE 1: Landmark's updated guide will show lower values than RERA.
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.
Is anyone else amazed that they can just put a price tag to a '4 bedroom apartment' but not actually make a disctinction between a 2500sqf 4-bedroom or a 1400sqf 4-bedroom apartment? Why should a 4-bedroom apartment of 1400sqf with rooms the size of shoeboxes (as in some of the Dubai Marina properties) cost the same to rent as a 2500sqf luxury 4-bedroom condo in the same area? The Index, whether published by RERA or LandMark or any other entity, should reflect not just the number of rooms... it should reflect size as well.
Are these guys from RERA serious? Wake up and smell the Qawah... Downtown Burj Dubai 175k - 200k? Have a look on Dubizzle and there are 2 bedrooms going for as low as 110k in Burj Dubai. Are these landlords doing this because they feel sorry for tenants during the financial crisis? Ahhhh Don't Think So! - They are doing it because they have to in order to let their apartments. People are sick of paying ridiculous sums of money to live in construction sites with questionable infrastructure... 175K - 200K? .... Good Luck!!
April 2009 Rental Index is for a new property or old property? Please RERA, get out from your office and see the reality!!
The index is better than earlier. I hope to see per sq ft rent in next version. That is the best way one can define rent or price. A 3 bed or 4 bed definition is vague and confusion. But, I am happy and hopeful that more improvisation happens.
I think some people in real estate are still hoping the golden days will return in Dubai. But the times of speculation and fast profits are over for now and at least the next 5 years. People learnt in a hard way that the properties they bought have just a virtual value. Many lost bitterly. From now on buyers will only pay for what they get. So better ger real, bring the prices to normal and improve the legal situation for buyers as well as the diversification for tentants and you will get your business back. Otherwise keep still standing.
RERA or LANDMARK? Which of these two is correct? In my building (Mankhool area) which is more than 10 years old there is a notice stating that all laws pertaining to rental renewals will follow RERA guidelines. RERA's guide for 1 Bedroom in this district shows 70-80k. In my building the rate is 90k. So, who do we all listen to? Is this for real or just for fun reading?
Who are these RERA executives and where do they live? are they actually in Dubai or do they live elsewhere? are they protecting their own interest because they are owners of huge properties and own so many buildings or are they being objective? RERA is only shaking whatever confidence left in Dubai by publishing fairy tales...
Even the new rental index published by RERA is not at all real, RERA, as always exaggerating the figures. Actual figures now in the market is lower than the figures mentioned in the index. It seems that RERA is not in a mood to admit the reality. The reality bites. People's greed to make quick money with exorbitant rents only now resulted in this disaster. Had the rents were reasonable and affordable, this recession impact would have been less in Dubai.
I'm not in agreement with the latest RERA Index. Prices listed are still too high; they are more or less the prices of 2007; that era is gone. The Rental Index still motivates local landlords to continue to be stubborn with their high pricing. I'm surprised that few are correlating the future of the emirate with the number of people that will elect to continue living in the country. The main reason for the very high inflation rate that this country experienced in the past few years is due to the high rent. The economy is like a body; while high inflation and high rent are diseases that will harm the body and make it sick; thus, eventually every part of the body will suffer. Lower/reasonable rent will maintain people to continue living, spending and investing in this country, which will benefit all including the stubborn landlords who eventually end-up losing if they will not properly correlate and understand the entire equation, rather than part of it.
is there anyone else amazed that there is no differentiation between a 25 year old property and a new one in the same areas? Who would rent a 25 year old Mercedes car from a car rental shop for the same price as a 2009 model? Only a halfwit IMHO