Thursday, January 22, 2009

RERA announces Rental Index for Residential Properties

The Real Estate Regulatory Authority (RERA) in Dubai has announced its rental index for residential properties, classified on the basis of various categories. Last week, the agency released the commercial property index.

The posting on RERA's website lists the residential index, which focuses on the apartment and villa rents in three main areas - Deira, Bur Dubai and freehold. This is further segregated into individual localities and home sizes.

According to analysts, the rental index lists values that are far higher than the prevailing market values. The index was compiled based on the market situation of 2008, when the rental rates were at their peak in Dubai. The agency may therefore have to re-look the index values soon, keeping in mind the current situation, following the impact of global economic recession on the GCC economies, one analyst pointed out.

However, RERA has highlighted the fact that the index should be used only for reference and is not any sort of legal obligation.

But, the analysts feel that landlords would utilize the index in their favour, as a justification to increase rents, irrespective of market conditions.

The decree issued by Dubai's Ruler on Monday, has further clarified that new rental contracts (both residential and commercial) signed last year, should not be increased, based on certain conditions. The decree states that rental contracts could be increased in steps up to a maximum of 20 percent.

Rental Values of Residential Apartments (Dhs '000)
Rental Values of Residential Villas (Dhs '000)




Rental Values of Freehold Property (Dhs '000)




[Source : RERA]

8 comments:

sunil said...

the issue with the RERA is that it is a backward looking measuring agency, not so much prospective thinking. it is mimicing the USA city government system where taxable and state equilized values are determined higher than true property values. so in a declining property value environment, taxpayers end up coughing up higher taxes. in dubai, such is the case with rents increasing while property values decreasing. it is only a matter of time before landlords wake up and start reducing rents. some rent coming in is better than none at the end of the day

Anonymous said...

According RERA ,our landlord increased my rent by 20% which is not fair.While we,expats are striving to survive in Dubai ,I think the goverment of Dubai should take it in to their consideration .Otherwise many of expats have to leave the country as they can't afford for the high living expenses in Dubia which mostly summerised in our accomadation rents.

Anonymous said...

This is not surprising, RERA exists only to faciliate the landlords not the tenants and this is becoming more evident with these kind of indexes. It is so evident that the market rates are much more lower and the index is only one of their measure to stop falling property prices. Any healthy practice should be only in favour of the consumer, tenants in this case for a healthy living condition which RERA completely negates.
Landmark properties index which is far lower than this and that itself reflects a bit more than the reality. In the coming days if at all there is any unfair increase in the market should all be contributed to RERA.

Sriraam said...

The age, condition, facilities (offered) & maintenance of the building should be considered while fixing the index. A 15 year old building should not command the same rent as a 2 years "young" building just by being in the same area! Size of the apartment should also play a major role in determining the index - a 400 sq.ft. one-bedroom apartment cannot have the same rent tag as a 600 sq.feet one-bedroom apartment!
Sriraam, Dubai

Anonymous said...

I am an Omani resident who has purchased property at Dubai Lagoons (of Schon Properties); I would desperately like to get in touch with ANY official at RERA who can shade some light on my investment, or even any individual as property holder (whether UAE resident or otherwise) of Dubai Lagoons. My contact addr is muuwah@gmail.com.

Anonymous said...

I live in Hor Al Anz(East). The average rental in this area is about 25000 for 2 bedroom apartment. Not even a single building will fetch a rental for 120-140 as stipulated by this index. A building next to ours is half vacant as they charge 85000 for 2 bed room apartment. Our building had followed same trend last year but is facing some trouble now as many tenants are leaving for cheaper rentals in Nahda area where the rentals have fallen by almost 40%. The Rental Index is ABSOLUTELY incorrect. Please rectify.

han said...

Hi, my name is Hanif I live in Australia I have an Apartment in Dubai International City. I am also agreeing that this Index is totally incorrect. I read in other website that Dubai property rent will increase in 2010, but My Real Estate agent will going to decrease I don’t understand. Please comments your thoughts I really wants to know that everyone facing the same renting problem.


Thanks

Sakhir Mohd said...

My Name is Sakhir, Iam also working one of the leading Real estate co. the Rera Index absolutly incorrect, but my company has follwoing the rule and helping the landlord,before making such index they have to make good survey and consider the building facts(Age,size,fecilities,etc,,,) Iam also staying @Al ghusais area they allowed to increase 20% my renewal rent. its absulutly Harram.