Dubai property brokers say the city’s rent index has been left behind by retreating rents.
As rents and values continue their slide, average prices on the Rera rental index are out of whack with the market, say brokers.
“With the Rera rent index system yet to evolve into a complex rental matrix that factors variables such as views, size of units, age of the building, etc, it will continue to lag reality, leaving tenants somewhat constrained by a rental index that does not fully reflect market conditions,” said Cluttons, the property broker.
_______________
[ ■ Find out where Dubai rents have risen and fallen, Q1 2015 ]
_______________
That may trigger more “off grid” deals where landlords and tenants agree to rents that do not reflect the recommendations of the property watchdog, the broker said.
The Rera rent calculator was introduced to map out maximum allowable rent increases on the expiry of a lease in developments across the city.
“It’s great we have one but there are still a lot of shortcomings that need to be resolved before it is accurate and representative of the market,” said Faisal Durrani, business development manager at Cluttons in London.
“What we expect to see is a lot of tenants agreeing to rents with landlords that are completely out of synch with the Rera rent index just that so that landlords are able to have a tenant and do not have a void period.”
Rera was not immediately available for comment.
House prices and rents are slipping as thousands of new units enter the market.
The property broker JLL predicted in January that rents and prices in Dubai would fall 10 per cent this year, while Standard & Poor’s said they would fall 20 per cent because of increased supply and weakening investor sentiment triggered by the tumbling price of oil.
scronin@thenational.ae
dalsaadi@thenational.ae
Follow The National's Business section on Twitter
