x Abu Dhabi, UAE Thursday 20 July 2017

Early update for rental index as prices slide

The emirate's housing regulator says the rental index will be updated this month to put it in line with current prices.

Official guidelines for rent levels in apartment and business complexes, such as these in Dubai Marina, are already out of date.
Official guidelines for rent levels in apartment and business complexes, such as these in Dubai Marina, are already out of date.

DUBAI // Dubai's housing regulator said yesterday that the emirate's rental index would be updated this month to keep it in line with current prices, which were now as much as 15 per cent below the listed figures. It has been three months since the Real Estate Regulatory Authority (Rera) published its first index of rents as a guideline for landlords and tenants. Rera's chief executive, Marwan bin Ghalita, told The National in early February that the index might have to be updated every two to three months - more frequently than the six months originally planned - to keep it in step with market fluctuations. "The new update of the rental index will be released in April," Mohammed Khalifa bin Hammad, the director of Real Estate Relationship Regulation at Rera, said in a statement released yesterday. "What has been noted from the first rental index is an average price change of between 10 and 15 per cent." Rera added that reports claiming it had delayed issuing the new figures because of a hold-up in gathering data were "entirely false" and based on information from "an unknown individual allegedly working for Rera". The agency said it established prices in the index using information gathered from an online rental contract registration programme. The figures published at the moment are based on 2008 rents. However, average apartment and villa leasing rates have already slipped from last year's peak and would drop 25 and 23 per cent, respectively, this year, according to market data published by Landmark Advisory, a division of the Dubai-based estate agent, Landmark Properties. Mr bin Ghalita has emphasised in the past that the index was intended only as a guideline. However, landlords are within their rights to raise rents by a certain margin if they fall significantly below the index ­figure. The rental index replaced Dubai's former rent caps, which still remain the preferred method of controlling rents in Abu Dhabi. But tenants in Dubai yesterday appeared unsure as to how rents in Dubai were being regulated. And despite a decline in rental inflation, several residents said prices were still too high. Eliot Beer, a British media professional living in the city, said: "In an ideal world the Government wouldn't need to set rental levels. It's a very opaque market. "The agents and landowners have had too much power and prices were driven artificially large." Mr Beer described the rental situation as "a mess", claiming that some landlords charged their tenants a portion of the service and maintenance fee to make up for regulated rents. Jamal Mohammed, an Emirati resident of Dubai, thought landlords were permitted to raise rents up to 20 per cent more than the previous annual rate. He said the Government had improved regulation of "how much rent is acceptable", but had "a long way to go before they actually become acceptable". Rents would probably decrease a little as people left because of the financial crisis, he said. "Then they will settle. But I don't think they will go down as much as people want." Ayman Kassem, an Egyptian living in Dubai, said the rent law was clear, except on the amount by which landlords could raise rents each year. "Sometimes it's not even in the contract," he said. "It's personal judgement. It's supply and demand. If you like the price hike, welcome. If you don't, then you can leave. "Of course rentals are high in Dubai. In Dubai, I don't see prices falling, but they're falling in other emirates." rditcham@thenational.ae kshaheen@thenational.ae