Saturday, May 02, 2009

RERA's new Rent Increase Calculator helps in stabilizing rents

Dubai Real Estate Regulatory Authority (RERA)'s website now includes a new Rent Increase Calculator, which halts any uncertainties prevailing in the real estate market.

The calculator has helped reduce the maximum rental increase in few localities, and the rents have now decreased by nearly 50 percent. In order to control spiralling rent rates, RERA had introduced a rental index last year. This year's index is yet to be released.

The calculator limits the maximum rents for all locations in Dubai. A triple bedroom villa in Barsha has a ceiling of Dh.140,000 down by 50 percent from Dh.270,000, compared to rental index of 2008. Similarly, a triple bedroom villa at The Springs now has a ceiling of Dh.160,000 in place, compared to Dh.280,000 fixed last year.

Even Al Karama witnessed a drop of 25 percent (from Dh.280,000 to Dh.135,000) for a triple bedroom apartment. In Garhoud, rents dropped to Dh.105,000 from Dh.240,000, marking a 56 percent drop.

Rents in the Mirdif area are down by 42.5 percent from Dh.20,000 to Dh.115,000 for three bedroom villas. The Managing Director for MENA (Middle East and North Africa) region for Jones Lang LaSalle, Blair Hagkull, said that housing affordability is utmost important for continued growth and competitiveness in Dubai.

The downward pressure on rental rates for mid and long-term is a positive indication, although it has implications for future projections of landlords, he said.

Meanwhile, the global real estate consultancy, Colliers International, in their study said that Dubai has seen a rental drop in residential units by 20 to 40 percent, since the last quarter of 2008.

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