Dubai Real Estate News
UAE Property Market Trends and Reviews

Boasting 365 days of sunshine, population growth and reliable economic growth, apart from a booming tourism hub, the UAE is also witnessing massive demand for rental properties. This comes as a tempting package for prospective buyers, states a report in Gulf News.

The new property law which regulates the mortgage process, protecting the rights of borrowers and lenders, making considerable advancements in the home financing market of UAE, offers more choice to consumers than before.

The UAE market is rapidly developing, when compared to markets in places such as the US and the UK, with the central bank data revealing that the mortgage lending in the UAE jumped 55 percent in the year till March.

Another factor worth noting when talking about home ownership in the UAE is the huge demand for rentals in the residential sector. Even the business men who have relocated to the emirates are getting disposed towards purchasing homes in the UAE.

Mortgage lenders are agreeing to offer finance to both end-user and investment purchases, and this makes the prospect of buying-to-rent and second-home purchases even more attractive.
Some confident owner-occupiers who comprise 70 percent of the market are willing to take out finance against existing property to raise cash for secondary purchases which indicates the fair manner in which UAE market is being perceived.

Home financiers, led by Islamic organizations are enjoying a 60 percent slice of the market, and are facing tough competitions from foreign banks keen on getting a slice of the action.

International and local mortgage lenders are striving to make it easier than ever to borrow money for property purchase in the UAE and most mortgage providers can offer customers a list of lenders to choose from.

Flexible and varied home loans are available from various sources, and it is getting all the more easier, to finance commercial, off-plan and under-construction properties, given that the planned property is registered with Dubai Land Department as per the terms of new mortgage law.

Also, it is worth pointing out at this instance that UAE market is standing firm, when the markets elsewhere is witnessing the impact of global slowdown, with the dirham still being pegged to the dollar. This implies that although supply is surpassing demand, rates are sizeable, and the UAE central bank can be forced to track number of US interest rate cuts and home loan rates are lower than during the same period three years ago.

Recent reports state that property prices in Dubai have grown over 70 percent beginning 2007, and more than 20 percent since the beginning of this year. So currently, buyers in the UAE are not looking at two to three percent profit gain in a year, but, the margins expected have grown considerably high. With such profits, interest rates are a secondary consideration.

Labels: Market Trends, Mortgages, Rentals, UAE

Labels: Abu Dhabi, Office Space, Rentals

Although the slowdown in residential rates continues in Dubai, there is light at the end of the gloomy rental tunnel, reports Gulf News.

Dubai, with its large population, has witnessed the negative effects of rental increases that stretch beyond the wallets of common man. Hence, such news comes as solace for Dubai population.

However, there will be no considerable residential rental increase compared to that during the past three months. On an annual basis, the average residential rates in Dubai, increased by 22 percent, says Asteco's quarterly report.

The Research Manager at Cluttons UAE, Mathew Green, says that although the current rental growth is lower than what was seen two years ago, the figures continue to remain strong and unmanageable for the majority.

He revealed that, however, no significant declines in growth rates are likely during the next few years, with supply failing to meet the high demand. The rental growth for apartments is being overshadowed by villa market with acute shortage fuelling huge increases.

According to Asteco, the increase in rents of villas is the direct result of continuous undersupply, marking a 20 percent increase compared to the previous quarter.

"The continued undersupply of townhouses and villas, compared to growing demand from UAE nationals and well-earning expatriates have led to huge leap in villa rents," said Asteco report.

However, the supply of mega-projects such as the Dubai Waterfront, Dubailand and the Jumeirah Golf Estates will help in soothing the undersupply during next two years.

Better Homes, agrees that the residential rates are unlikely to drop and in contrast, it is likely to increase during the first and second quarters of 2008. However, there is stability, due to rent caps imposed for tenants residing in existing properties. However when considering leasable properties in these areas, rents are still on the rise, due to undersupply of rentable properties.

According to analysts, the rates will begin to stabilize when more developments are delivered. It has been noted that Sheikh Zayed Road in Dubai is one of the most popular locations, recording highest annual rental growth of 51 percent. This is followed by Bur Dubai with an annual rent increase of 42 percent. With the availability of rentable accommodations coming only from new apartments, landlords are taking advantage and demanding high rents from desperate home-seekers, it is said.

Labels: Market Trends, Rentals

Rents in Abu Dhabi, although have reached their maximum best, are likely to increase further, during the next few years, in view of the worsening shortage in supply, reveal recent reports.

According to the Abu Dhabi Chamber of Commerce and Industry The low and middle income expatriates will be the worst affected with the increase in rents, which have more than doubled during the past three years, while the salaries have remained the same.

After years of stability during 1990s and 2000, the property market in Abu Dhabi witnessed a jerk in 2006, due to the strong domestic demand, caused by an economic upsurge that shot up rents to sky-high levels, despite the introduction of rent caps by the government.

The Chamber reports that although the real estate market in the capital was more or less stabilized in 2005, with the 287,000 housing units being able to cover the domestic demand, a surge in demand during 2006, did not meet a similar supply growth. This resulted in a shortage of 3000 units. During the year 2007, the demand-supply gap was more than doubled and touched nearly 8000 and is further expected to touch 20,000 by this year.

The Chamber, in its report, states "Most housing units which will enter the market this year will cater to the hig-income sector, while the low and middle-income category will be the victims of shortage and rent increases."

"We expect a record supply shortage in housing units, which exceeds 20,000. This will aggravate the property situation in the emirate, pushing it from bad to worse, which in turn will affect the economic activities in the emirate and push inflation to new record levels," the report said.

According to property dealers, rents in the capital have increased by more than 25 percent in 2007, and by 15 percent during first quarter of this year. The increase has been attributed to the huge increase in demand and rapid growth in population, an intensifying influx of expatriate workers due to surge in projects in the Capital, failure by landlords to abide by the rent caps, and the concentration of property developers on costlier properties that caters to high-income sector.

"Buildings that are under construction in Abu Dhabi will cater to only 20 percent of the demand. This will only widen the supply shortage, and when coupled with the population growth, it will push rents to record high levels. As rents account for more than 40 percent of consumer spending, this increase will further aggravate inflation in the emirate," states the Chamber report.

Abu Dhabi has one of the highest per-capita incomes in the world, projected to touch Dh.225,000 in 2008. As per figures by the Abu Dhabi Department of Planning and Economy, population in Abu Dhabi has grown by 12.6 percent, and is likely to grow by 7.5 percent his year, which is one of the highest in the world.

Labels: Abu Dhabi, Real Estate News, Rentals

Labels: Dubai Real Estate, Office Space, Rentals

Labels: Dubai Real Estate, Latest News, Rentals

The price of homes in Abu Dhabi is likely to shoot-up by at least 20 percent in the current year, states a report from Sorouh Real Estate.

The report indicated that demand surpasses supply, and negative real interest rates are contributing to more investments. The Europeans are investing in the UAE, with an intention to make better use of their Euros, while the dollar is declining, taking the UAE dirham with it.

The five-fold increases in oil prices during the past six years have boost Abu Dhabi's economy and the low interest rates have led to more investments in real estate.

The Chief Property Development Officer of Sorouh, Gurjit Singh, said "We easily notice a growth of 20 percent this year. We are seeing the growth phase and it is still very early on the clock."

He said that the average prices for residential sectors range between Dh.1300 and Dh.1700 per square foot. The numbers of Europeans investing in Abu Dhabi residential sector falls between 8 and 12 percent, and the numbers are on the rise due to the strength of Euro and the Pound.

Sorouh is also developing realty projects worth Dh.40bn, Singh revealed.

Labels: Abu Dhabi, Latest News, Rentals

As per reports, Dubai continued to witness huge demand for office space last year, with the emirate reflecting one of the highest global rental yields for commercial premises, ranging 17 to 18 percent.

Asteco, in its quarterly market research, reported that there was a huge increase in capital values, particularly, in locations where the new buildings were nearing completion.

The rents for office space grew by five percent on an average in comparison to the last quarter. The highest rent rates were noticed in Oud Metha and Sheikh Zayed Road, with 6 and 12 percent respectively, as per the fourth quarter report of Asteco.

When compared to the rates during the corresponding period in 2006, the office rents in Dubai last year saw a considerable increase of 44 percent, and the occupancy rates continued to touch 97 to 99 percent, the report revealed.

The Director at the Research Valuation and Consultancy at Asteco, John Allen, says "The increase in prices indicate the fact that the commercial sector of Dubai does not have a liquid secondary market at present. The limited delivery of new office premises over the last couple of years has brought about an undersupply in the market, resulting in strong surge in office rents and sales prices."

Asteco anticipates that the commercial units would witness another surge in prices, as the buildings near completion next year. However, according to Asteco, a shortfall in supply of of nearly 18million square feet of office space would be experienced next year due to delay in construction.

"We expect that landlords would get more competitive with increase in supply. More high quality finishes that are being offered, will be tailor-made to suit the requirement of tenants, and most important, the rents will stabilize reflecting true market values," Allen said.

A new factor that will have a major impact in the commercial property market during this year, will be, the implementation of the new 'green rules', which would become effective this year.

Labels: Commercial Property, Latest News, Rentals

The Annual rent cap in Abu Dhabi has been reduced from 7 percent to 5 percent yesterday. This was done to regulate the high rentals and housing crisis in the emirate. The decision is to take effect immediately.

The decision has been issued by the Abu Dhabi Executive Council, based on Law No.20 for 2006, that speaks about landlord-tenant relationship, and aims at curbing the negative impact of high rentals on the emirate's competitiveness, sustainable economic growth and social stability.

Such a move has been initiated in response to recent reports which pointed out an unprecedented increase in rents. The new contract will remain subjected to inflationary pressures, based on factors such as the cost of construction, and shortage of supply.

The Chairman of the Construction Committee, Khalfan Al Ka'abi, said "This is a step in the right direction, and this will have a real effect on residents. However, some more time may be required to solve the housing crisis completely."

Certain units will be delivered this year, but, the majority of the units will be delivered to the market only in 2009, and this supply would ease the market to a great extent, he added.

Labels: Abu Dhabi, Property Law, Rentals

The Dubai Government is shortly expected to announce a tenancy law, that will re-define the landlord-tenant relationship, while also managing the rent disputes, and a comprehensive legal framework would be introduced, for the booming residential rental market in Dubai, said a top government official yesterday.

At the moment, it is the responsibility of Rents Committee to settle disputes through an informal arbitration system. This is likely to be replaced by a new tenancy law, which has been already approved by H.H. Shaikh Mohammad Bin Rashid Al Maktoum, the Vice President, Prime Minister of UAE and Ruler of Dubai.

The Assistant Director General of Dubai Land Department, Mohammad Sultant Thani said that all issues pertaining to rents, tenancy, bachelor accommodation, subletting, landlord-tenant disputes and all other social aspects, will be tackled by the new law. However, whether the rent cap too, will be regulated through the new law, is yet to be known.

Increasing rents have been a big cause of worry for nearly 85 percent of Dubai's expatriates, who form 1.44million of population, a majority of whom live in rental units. During the past few years, rents have hiked rampantly.

In the meanwhile, Thani revealed that so far, the Dubai Land Department, has registered 72,000 units ever-since the department was established in 1960s, while last year, we have registered 11,000 units.

Thani mentioned that the new law will further strengthen the Dubai property market, as there has been a steady growth in the property market ever-since expatriates were allowed to own property. Once the law takes effect, all existing freehold apartments, residential units and villas for rent, will come under the law.

Labels: Dubai Real Estate, Latest News, Property Law, Rentals

A new property index will soon be released in Dubai, which would be of help in establishing appropriate rents for properties in the emirate, so as to control the shooting rental prices.

The Real Estate Regulatory Authority (RERA), has said that the new index would come into effect from 15th of this month, setting up the minimum and maximum chargeable rents for properties in particular developments.

With the introduction of property index, the landlords are left with no choice but to set rents within the stipulated limits. The tenants and those in the look out for rentals, will also be benefitted as it will serve as a guide to ensure that they are not being overcharged. Any complaints thereafter could be then reported to the rental dispute committee.

Dubai has issued an annual rent cap of 5% for 2008, which is lesser in comparison to the 7% capping of 2007.

Labels: Dubai Real Estate, Property Law, Rentals

The Vice President and Prime Minister of UAE and Ruler of Dubai, H.H. Shekh Mohammad bin Rashid Al Maktoum, has issued a decree on 27th December 2007, lowering the annual rent cap in Dubai by 5% from the existing 7%, beginning 1st January, 2008. This rent cap would be implemented by the RERA (Real Estate Regulatory Authority) and the Dubai Land Department (DLD) in 2008.

This new rent cap would be applicable to new tenants, whose rents were not increased last year. However, for those tenants, who have had a rental increase in 2007, there will be no new increase.

At present, Ras Al Khaimah and Fujairah have both had a rent cap of 15%, while Abu Dhabi maintained 7% rent cap.

This move by the Dubai government has been much appreciated by the residents, realty developers and brokers, as strong demand and lack of adequate supply, had increased rents tremendously during recent past, which is a cause of concern among residents in Dubai.

The RERA Chief Executive, Marwan bin Ghalita, has warned that any increase beyond the proposed cap, is in violation of the rule, and in such a case, tenants should not agree to sign the contract.

Labels: Dubai Real Estate, Latest News, Property Law, Rentals

The office rents in Dubai, and Doha are likely to go up by 20% next year, as the demand surpasses supply, and due to the expansion of international business in the Gulf region, revealed the property services company, CB Richard Ellis.

"The top-quality offices in Dubai, cost as much as Dh.500 per square foot, and this in-turn could increase prices to Dh.600 per square feet next year, which would continue for 18 months, and thereafter the prices may probably halve to about Dh.300 per square foot in another five or six years with an increase in market supply" says Nicholas Maclean, the Managing Director, CB Richard Ellis.

However, at present, there are not enough supplies reaching the market, which would do no good to the businesses or for the government.

As far as Doha property is concerned, the demand is increasing, with an expansion in oil and gas companies, and the government is seeking new space. Although, the prices in Doha are lower than that in Dubai, the trends are the same.

On the other hand cities in India, Egypt, and Philippines are gaining advantage from the rising prices, as businesses turn to them for back-office operations, said Maclean.

The office space in Dubai is likely to more than triple touching 100 million square feet, as against the present 30million, during the next five to six years, Maclean concluded.

Labels: Dubai Real Estate, Market Trends, Office Space, Rentals

In a city, such as Abu Dhabi, which is so full of new real estate projects and in peak of construction boom, it is a startling fact to note that thousands are left struggling to find suitable properties to rent, reports Gulf News.

According to Property Consultant and Director of Global Hills, Diana Stebbins, a solution to this property hunt would finally be found during 2009, when people could buy and move into their own accommodation. However, for now, the villas are divided into four or six partitions for accommodation of bachelors and dual occupancy units.

The landlords and developers are taking full advantage of the current demand for housing, and have found this as a suitable opportunity to increase rent rates and prices.

A resident, who has been residing in Abu Dhabi for the past thirteen years, says that during the past two years, it has been shocking to note that some places have even doubled in rent rates. On the other hand, the landlords do not have much property to rent, as during the past. Even in case the property is available, it is sold out or rented within 24 or 48 hours.

The Abu Dhabi Chamber of Commerce and Industry has made it clear that the housing situation in only going to get worse, as by 2008, atleast 13,000 units would be required to keep pace with the demand.

Although, the endless campaign ads by development companies, gives a ray of hope initially that the demand may level out supply, a closer look would reveal that such properties are mostly businesses, hotels or housings meant for 'only' the upper-class who could afford to pay atleast Dh.15,000 to 20,000 a month for a "modern" single bedroom apartment.

This way, an average foreigner, moving into Abu Dhabi, hoping to live in a decent apartment and saving the extra money, is left in the lurch, as for those with an average income of Dh.12,000 a month, it is nearly impossible to save. With such a scenario, saving is the last thing that a single-income family could think of, as the money earned is being spent instantly.

Labels: Abu Dhabi, Property Prices, Rentals

According to reports by Asteco, a leading property consultancy, the rental rates in Dubai has almost tripled and has increased to an astounding Dh.270 to Dh.280 per square feet from Dh.90 to Dh.100 per square feet during the year 2005.

The commercial property sector in Dubai has witnessed major boost in office rents during the past few years, due to the high-demand generated by continuous influx of multinationals setting up their base in Dubai and the growth in existing businesses.

The Director -Research Valuation & Consultancy at Asteco has stated that this increase in commercial rents will continue until 2008, due to the delay in construction. But towards the year 2009, majority of new supplies will hit the market, thereby easing rental hikes.

The Asteco report reveals that rent on Shaikh Zayed Road has risen to Dh.350-Dh.375 per square foot, as against Dh.220-Dh.240 during 2006. Few other areas witnessing increased rentals are the Karama, and Bur Dhbai at Dh.265 and Dh.280 per square foot respectively. This reveals a corresponding increase of 51 and 24 percent respectively, over the rates of third quarter 2006.

The rents in Dubai apartments have increased by 25 percent from 2005 to 2006 and by 18 percent from 2006 to 2007.

Labels: Dubai City, Dubai Real Estate, Real Estate News, Rentals

Analysts are of the opinion that imposing a 'voluntary' rent cap, could turn the current situation in favour of Landlords, leading to a rampant increase in rent rates.

This statement came, following a leading government official's statement that Dubai's rent cap may become voluntary, permitting landlords to adjust rents on par with current market rates.

The CEO of RERA (Real Estate Regulatory Authority), Marwan bin Ghalita, said that the cap on price increases for renewed rents, when being renewed during the following year, should be done at a lower level than the current seven percent.

However, he emphasized that in case the commercial or residential property Landlords are of the opinion that the cap is responsible for keeping rents below the market prices, they can argue for an adjustment, based on benchmark rate, recommended by RERA.

According to Bin Ghalita, this system could be successful in reducing situations where the Landlords tend to evict tenants under silly pretexts for the sole reason of getting better rents.

"We will have a rent cap, but will permit the Landlord to adjust the rent based on market value. Both parties should be happy. If you are a tenant staying in an under-priced property, then there should be a way to resolve this. Currently, landlords feel that they have the option of kicking the tenant out of the property and re-renting it. We want to stop this," Bin Ghalita quoted.

He added that despite this, landlords will not be in a position to increase rents during the second year of a contract. In case the Landlords feel that the rent cap is responsible for keeping prices below market rates, they could seek help of Rent Committee to argue their case.

RERA has been assigned the task of registering all rental contracts in Dubai, allowing it to build up annual produced rental price index for every community in the emirate - a benchmark for rental rates.

Currently most residents feel that Landlords with an intention to avoid rent cap for renewal of contracts, are re-leasing the properties to new tenants at a higher rate.

Labels: Latest News, Property Law, Rentals

A senior official in the Abu Dhabi Rental Disputes Resolution Committee has clarified that Landlords cannot evict tenants for the sole purpose of change of business, from residential buildings to hotel apartments.

The Chairman of the Resolution Committee, Mohammad Rashid Al Hameli, said "Changing business from residential building to hotel apartments is not a legal ground to evict tenants".

Al Hameli mentioned that legally landlords do not own the right to evict tenants, unless in specific cases, such as approved demolishing for personal use, or for tenants failure to pay the rent, or subletting the property without the approval from landlord or for violating public norms.

In case of demolishing the building, the tenant should be informed about it six months in advance, and in case it is found that the landlord has not been living in the property after evicting the tenants under the pretext of personal use, or if the property has been re-rented to another party, the tenant can place a complaint before the committee, said Al Hameli.

Al Hameli also clarified that tenants should not obey any eviction orders by the landlords or other authorities, unless the eviction order has been approved by the Rental Disputes Resolution Committee. Speaking on eviction notices, Al Hameli advised that tenants have the right to receive notices but should sign clearly that although they are in receipt of the notice, the eviction order was rejected. At the end of tenancy contract, the tenants can then submit a complaint to the committee and deposit the rent or any installment pertaining to the building, as per the terms of contract in cash, so that it could be renewed.

It has been found that off-late, there is an increasing tendency for landlords to give away the building to hotel operators on a yearly lump sum rental basis so as to convert the building to hotel apartments.

Tenants have requested the Rental Dispute Resolution Committee to issue clear guidelines for tenants to understand their rights, particularly the circumstances under which they could be evicted from the building.

Labels: Property Law, Real Estate News, Rentals

Shaikh Sultan bin Mohammed Al Qasimi, the Crown Prince and Deputy Ruler of Sharjah, and Chairman of Sharjah Executive Council has passed the new rental by-law for the emirate, which states that the landlord cannot increase the rent until three years after signing the lease agreement, and every two years thereafter. The bylaws were issued to help the rent dispute committee jurisdiction to handle complicated procedures in a simple manner.

Numerous factors such as the quality of the property, the location, the number of storeys, the finishing of the building and the disputed property, the age of the building, the level of service, the space of property and the like, needs to be taken into consideration while deciding a rent hike.

Subletting the property is not allowed, except with the written approval by the property owner. In such cases, the tenant can transfer the lease to the new tenant with the landlord's approval, after which, a new contract should be signed and attested between the owner and the new tenant. According to the bylaws, it is the responsibility of the tenant to ensure the safety of the property and prevent damages, while the landlord is responsible maintenance of the property.

The Landlord cannot evict a tenant before three years after the signing of a contract, unless there is a violation from the tenants end, such as a failure to pay the rent within 15 days after the elapse of due date (in case of residential property) and within 30 days after due date (in case of commercial property).

However, the landlord can evict the tenant in case the property is required for any of his adult children to live in, if they have no other alternative, or in case the building needs extensive maintenance or needs to be demolished. But, landlords should never try to compel a tenant to vacate the premises, by adopting silly measures such as disconnecting the air-conditioning or water or power supply or on the pretext of cleaning and maintenance.

Labels: Latest News, Property Law, Rentals, Sharjah