Dubai decree: no impact?

The ruler of Dubai has issued a decree stopping any increase in rents on residential and non residential properties in the emirate but few believe it will have effect as it only refers to recently renewed leases...

Sheikh Mohammed bin Rashid Al Maktoum issued the decree to freeze rents in 2009 for tenants who renewed their contracts last year.

Mohammed Ibrahim Al Shaibani, Director of the Dubai Ruler's Court, said the decree was aimed at curbing the growing increase in property rents in the emirate and maintaining a balance between the interests of both landlords and tenants.

It states that rents for both residential and commercial units set last year are frozen unless they are more than 25 per cent below the guideline figure recommended in Dubai's new rental index.

However real estate experts claim that thousands of tenants across Dubai could still face steep rental price rises despite the decree and that the rent index is too simple.

They point out that many expatriates who arrived in the emirate before rampant inflation took hold face paying substantially more to renew their leases this year.

'There will be quite a lot of people who will potentially see their rent rise in 2009. Those people could have been in there two, three, four, five years and historically they've kept it down so that they would be in line for increases,' said Andrew Chambers, Managing Director of real estate consultant Asteco.

There are also concerns about the rental index recently announced and claims it will damage sentiment in an already rapidly cooling market at a time when landlords should be free to charge what they want to stimulate the economy.

Dubai's Real Estate Regulatory Authority is accused of putting out of date price recommendations on the index which is voluntary.

Rera recommends that a one bedroom apartment in the Greens should cost between £21,500 and £25,400 a year.

The price of renting a one bed flat in International City, should be £12,700 to £14,700 a year, according to the index but a similar property in Jumeirah Beach Residence is put at £21,500 to £29,400 a year.

'The prices in the rental index are way down on what landlords were getting last year. The market should speak for itself. The prices are out of date and are too simplistic,' said Laura Adams, Leasing Manager at broker Better Homes.

Source: www.propertywire.com