What is happening with Dubai’s rents?
In spite of reports that Dubai’s does not need a rent cap in 2009, Dubai’s ruler has issued a decree halting any rent increases this year. Why?
January 20, 2009 12:12 by Aarti Nagraj
Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum has issued a decree that stops any increase in residential and non-residential property rent in 2009 for the tenants who renew their contracts signed in 2008, reports official news agency, WAM.
Landlords can impose increases in 2009 only if the rent they charged in 2008 is more than 25 percent below the average market rate set by Rera’s 2008 rental index.
Mohammed Ibrahim Al Shaibani, director of the Dubai Ruler’s Court said the decree was aimed at curbing the increase in rents in the emirate, and to ensure the sector’s stability.
Interestingly, Marwan bin Ghalita, the CEO of Dubai’s Real Estate Regulatory Authority (Rera) recently told Gulf News that a rent cap was not needed this year: “We don’t need a rent cap this year. We need to freeze everything. 2009 is a tough year and we shouldn’t interfere with rents too much,” he said.
A recent report published by Asteco supported Ghalita’s claim by stating that rents in Dubai did not rise in the last three months of 2008, rising a mere four percent in the whole of 2008.
So if rents were not rising at all, what prompted a decree from Dubai’s ruler? It sounds like a rent cap to us (albeit a complicated one).
Is it a way to persuade the evacuating population of the city to stay back? Or is it just a step to regulate the so far unrestrained rent sector? And what about those signing new rent contracts? Will they benefit from the decree?