By Joanna Hartley
Just 5% of responders agree RERA's index of rental values is accurate.
More than two thirds of responders to an online poll believe that the recently revealed rental index from Dubai’s real estate agency is a total disaster, it was revealed on Saturday.
The Arabian Business survey found that 61 percent of people agreed that the minimum and maximum rental values outlined in the index would force many people out of their homes, because they would be faced with big rent increases.
Just 5 percent thought the values, which vary depending on which part of Dubai the property is situated, were “a pretty accurate" reflection of market prices, and would be helpful to tenants and landlords alike.
A further 19.5 percent thought the valuations were mostly inaccurate and would cause disputes between tenants and landlords.
And 14.5 percent backed the principal, but did not agree with the valuations set out by the Real Estate Regulatory Agency (RERA).
The poll follows warnings by real estate experts on Jan. 20 that thousands of tenants across Dubai could face steep rental price rises if landlords follwed the rental index.
This is despite a decree issued by Dubai’s ruler on Jan. 19 that froze rents on residential and commercial properties in the emirate for 2009 - banning landlords from hiking rents above 2008 prices.
However, the decree only covers tenants who renewed their contracts last year.
For those whose rents fall more than 25 percent below the guideline figure – likely to be long-term tenants - the freeze does not apply.
Who cares about the two thirds and their terming it as dangerous .... There would definitely be someone somewhere (infact 5 percent) who would say yes to ANYTHING. I am already caught up in the eviction for hotel apartment battle and despite carrying a good head on my shoulders - am utterly confused whether to go in for ownership or further renting - though my tilt is obviously towards the latter. Owning something in a place where unsolicited indices spring up on the whims and fancy of a few and further cemented by decrees, would be like putting my money up in Las Vegas. I am sure the index has been compiled by some learned professionals whose professional capabilities are in line with the Engineers of Dubai Municipality who ended up issuing a Hotel Apartment licence for this 28 year old dilapidated building (having had 2 apartment fire incidences in 08) which deserves demolition rather than renovation. Long live the ........
Poll or no poll, we can all be talking until the cows come home and still the landlords will remain protected no matter how. Tenants will always be at their mercy.
The populist vote will always be for rents to reduce so RERA's first index may be criticised. But is a completly fair evaluation for all properties built in 5 years or less. The main issue is with the older buildings an villa's. The index does not have a measure based on the age of the property. Once this is introduced it will become a lot more believable to the mass market
I don't think the rental index is particularly dangerous. It is just rather comical that they produce it right as the market is tanking, it almost seems like an attempt to officially enshrine peak values. The market has moved on, and very quickly. For example, 1-bed in the Greens according to RERA index is 110k-130k. This is nonsense, those were the prices in August 2008. Already people are advertising 1-beds within the Greens notice boards and elevators for 85k. In 3 months time, the going rate will probably be 75k, probably less if you can pay with 1 cheque or two. That brings it close to the level many with capped rents are on anyway. The important thing as a tenant is not to blindly accept what landlords or agents say these days. If you walk away, they will come back with a better offer. You have choices now, negotiate hard. Consider 6 month lease too if you can get it, prices will be much lower in 6 months from now. The market forced prices up on the way up, it will bring them down fast on the way down. The RERA index cannot stop that. It might delude a few landlords, but they will learn the hard way if they decide to base rents on it that the market determines rents, not the authorities.
Thanks DG, now we all know how you voted in the poll :-) However, if you truly believe that rents in excess of US$80K per annum for apartments and US$122K for villas (whether they are newer or older) represents â€œa completely fair evaluationâ€ you need your head read mate! Either that or you are one of the lucky ones whose company pays on your behalfâ€¦â€¦. However, in order to give you the benefit of the doubt, please provide this forum with real-time, market related examples from any other country on the planet where these levels of rentals exist?
DG, No, it is not fair at all. It is based on the hyperinflated prices of August/September 2008. The real estate is worth as much as the buyers want to pay for it.
We are debating the wrong issue here, the issue is not whether the rent index is fair or not, the issue is the there will be a 40% market correction in the rental market by mid year, so let's wait and see the next year's rental index. How will the extra 10-15% "basic finance charges for accepting 12 cheques" be accounted for in future rent indexes??
East or West, the Sun can never rise in the west & set in the East. and that's the way the rules can never be in the favour of the tenants. It will always be in favour of the Landlords. As we all know the tenents here means the Expatriates and Landlords means...... So if you you are ready to pay whatever hiked rents they ask for you stay... When you are not able to afford move off.. If last year you were paying 75k for the appartment and this year being asked 125k, its still cheaper. May be there will be new law in 2011 and you will be asked to pay 250k for the same... So stay till you afford... Good Luck
I BELIEVE ISSUED RENTAL INDEX IS FARE AND SECURES THE TENANT AND LANDLORD. THE RENTAL PRICES SHOULD NOT COME DOWN ANY FURTHER THAN WHAT MENTIONED AND PUBLISHED AS RENTAL INDEX AND THE RULE OF CHANGE OF RENT IF VARIANCE ABOVE 25% SHOULD APPLY. MANY PEOPLE DID INVEST ON THE PROPERTY BASED ON THE RENTAL INCOME , AND IF RENTS COME DOWN ANY FURTHER NOT ONLY NO EXPATRIATE WOULD INVEST IN U.A.E. , BUT THE MAY WITHDRAW THEIR CAPITAL AND LEAVE THE COUNTRY. U.A.E. IS DUE TO BE PARADISE OF MIDDLE EAST IF NOT THE WORLD WITH THE HUGE INVESTMENTS OCCURRED BY LOCAL AND FOREIGNERS UNDER THE EXCELLENT MANAGEMENT WHICH WAS ALL DUE TO GREAT OUTLOOK AND EXCELLENT PLANNING OF U.A.E. GOVERNMENT DECISION MAKER ,WHOM NOT ONLY BENEFITED THE COUNTRY BUT ALSO THE INVESTORS. FURTHER REDUCTION OF RENTS WOULD END TO MORE CRISES IN PROPERTY MARKET WITH THE END RESULT OF LIMITING INVESTORS TO INVEST ANY FURTHER , HENCE REDUCTION OF DEVELOPMENT / EMPLOYMENT ,ETC. I PERSONALLY HAVE LOTS OF REGARDS AND AM THANKFUL OF U.A.E. GOVERNMENT DECISION MAKERS , AS THEY HAVE SECURED THE BENEFIT OF EACH AND EVERY SINGLE PERSON IN U.A.E. , AS WELL AS INVESTORS , REGARDLESS OF NATIONALITY (EVEN IF THEY DO NOT LIVE IN U.A.E.)
Kamal, you're really a genius. The crisis in the property market exists because of overevaluation and speculation. There was never a demand against the projects launched. So it was clear that at acertain point the bubble would burst. And of course soeculators and money launderers are the first who draw their money back. Also it now appears, that the major part of Dubai investments was not paid from real assets but from loans. And this is where the global financial crisis hits. Dubai and the whole Middle East needs to come down to reality even though if this means loosing out on rapid development and massive employment. With all the oil money they will come back for sure.