Freezing Of Rent Limit Will Stabilise Market’

Real estate experts say that limiting rent increases to maximum averages contained in an index will have little or no effect as the leasing market is already in decline. A decree from the office of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai on Monday, said that rents could not increase further than averages laid down in a rental index. It is good to freeze the rent limit as it will stabilise the market,” said Anil Gehani, CEO of Zabadani Real Estate. But since the rents are already going down it might be as significant now as it would have been if it was issued six months ago. In order to prevent a further loss of demand, real estate experts say the government should make it easier for people to stay in the country and look for work even after losing their jobs. Since people are leaving the country, the demand will decrease,” said Ramil Aryan, of Response Real Estate. “Demand and supply is the basic principle on which the market functions. Freezing rents doesn’t mean a lot as rents are already coming down,” said Ali Zaida, CEO of Centurion Real Estate. “The government should do something to retain people here. The existing situation is that if you lose your job you have to leave the country within 30 days. People should be given some kind of permit or green card, to stay on and look for another job. The economic crisis has affected the whole world but there are certain ways to control it. In the UAE scenario, retaining people should be the main focus of the government,

Dubai Rent 'Capped At 20% Maximum'

According to a decree regarding rental prices in Dubai, rents that are up to 25% less than the lowest band of the newly released Real Estate Regulatory Authority index average, and most new 2008 contracts, will remain frozen. Beyond this rents will go up by 5% for every ten percentile difference, up to a maximum of 20% to ensure that long term tenants are not hit with excessive increases.

Decree Leaves Residents Wondering Whether Rent Will Be Raised Or Lowered

The new decree issued to curb the soaring rent in Dubai has caused some confusion among residents. Some Gulf News readers expressed their concerns about the law, as many of them do not understand the intricacies. Sumanta K. Banerjee, an Indian expatriate, thinks that this new decree would only add to the confusion. He said, "Many of us do not wish to get into a debate with the landlord and pay the rent without asking any questions. However, the statements issued by Dubai's Real Estate Regulatory Authority (Rera) and the landlord are completely different. Banerjee stated that he had many doubts and questions about the new law, which remain unanswered. He said, Some of us had to pay the rent for 2009 before December 31, 2008. In that case, the new law would not apply to us and many landlords have increased [the] rent already. Mary W. Nganga, a Kenyan expatriate, waits in anticipation for rent to decrease. She said:
The new decree states that the rent would not increase. However, what happens if the rent is above the average market rate? If the rent is not lowered, it would not be beneficial to the tenants. We require adequate information to avoid any inconvenience. Harry Maltby, a British expatriate, commends the decision and hopes to see it being followed rigorously. He said, This is a step that needed to be taken much earlier. A lot of people are leaving Dubai, since they cannot afford to stay. Landlords are left with no choice but to reduce rent, in order to provide an incentive to potential tenants. Nilmereneaus Maratas, a Filipino expatriate, believes the new law would be beneficial for the economy. He said, This matter does not affect an individual alone, but in fact has an impact on the economy, too.

Dubai Moves To Rein In Rents

Tenants whose home or commercial property is less than a quarter below the average price for a similar premises will not have to pay any increase in rent, according to a decree issued on Monday by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE, in his capacity as Ruler of Dubai. Mohammed Ibrahim Al Shaibani, director of the Dubai Ruler’s Court said the decree was aimed at curbing the increase in property prices within the emirate to maintain a balance between the interests of both landlords and tenants and to ensure stability of the real estate sector, according to state news agency, Wam. The decree, the Ruler’s first of 2009, provides for a freeze of rent prices in 2009 for tenants renewing contracts signed in 2008. It states that the rental value of those properties must be equal to or less than 25 per cent of a corresponding rent average established by the rental index.
The guideline for the rental index was issued on Wednesday last week by Dubai’s Real Estate Regulatory Authority and is expected to replace the rent cap. While the authority has issued a point system for evaluating the rental value of a property, the average rents for properties are yet to be ascertained. The evaluation process for all types of properties is based on giving each property points for various attributes such as building facilities, near-by retail outlets, age and condition of building, etc,” according to the Rera statement. These points are used as a statistical basis to set a minimum average and a maximum average rent price. The minimum average and maximum average rent price are yet to be declared and the status of the evaluation process has not been given by the authority. However, the decree issued on Monday states that the rate would be established when the tenancy contract is renewed. The ruling also defines a formula designed to generate lower rent values but allowing a proportional increase in 2009. Another decree outlined the relationship between the tenant and landlord. The law, which came into effect on December 1 last year, has been amended. It includes points on the basis of which a tenant can be evicted, such as non-payment of rent or if the tenant is found subletting the property.

Emaar To Raise Up To $2bn From Bond Sales

Emaar Properties, the UAE's largest real estate developer, plans to raise up to $2bn by selling Islamic bonds. A prospectus for setting up a US$2 billion trust certificate programme by a unit of Emaar was approved by the UK Listing Authority, the Dubai-based company said today in a Regulatory News Service statement. A unit of HSBC Holdings will serve as the principal paying agent for the programme, Emaar said.

Dubai Property Prices May Fall 60pc From Peak: Shuaa

Dubai real estate prices could fall as much as 60 per cent in 2009 from their peaks in July last year, while Abu Dhabi may slide as much as 20 per cent, Shuaa Capital said on Sunday. Real estate prices have fallen by around 40 per cent in Dubai and by around 15 per cent in Abu Dhabi from their peaks last year, Roy Cherry, vice-president, research at the Dubai-based investment bank told reporters on Sunday, adding that rents in Dubai are likely to fall some 20 per cent in the next two years. Dubai is seeing a negative growth in demand for real estate,” Cherry said. At the same time it is seeing an increased output. We think the net result of that is lower occupancy rates, going down to the 80 per cent level which will mean a correction in the rents. Dubai’s population was likely to fall 5 per cent in 2009 on job losses, while the population of the UAE would ease 1 to 1.3 per cent, Shuaa said. Rental rates for apartments and villas have been levelling off throughout 2008, with an average growth rate of 4 per cent and 8 per cent respectively, property services firm Asteco said in a report last week.

DIB, Rera Host Escrow Forum

Dubai Islamic Bank in partnership with Real Estate Regulatory Agency hosted over 50 real estate developers at a recent escrow forum. The forum provided a platform for DIB's escrow account customers to communicate with RERA. As one of the largest escrow players in the market, DIB has been actively involved with consulting RERA on general issues related to the escrow regulations.