The Dubai Property Rental Index Released By RERA

With rental prices for Dubai residential real estate reaching record levels in 2008 and generally being a source of dissatisfaction for everyone bar landlords, the Dubai Real Estate Regulatory Agency’s (RERA) property rental index has been much anticipated amongst Dubai residents. The commercial Index was released last week, and this week has seen the revealing of the residential Index, but it was certainly not what everyone was hoping for! With the Dubai economy not far away from being certified as a crisis state, property prices falling at an alarming rate and redundancies being seen from some of Dubai’s largest companies, it is probably fair to say that everyone was expecting the rental price index to suggest a sizable reduction in rental prices. Not so.

The index is compiled into 3 main sections based on areas. There is Deira, Bur Dubai and then all freehold properties. These sections are then further subdivided based on housing type, size and sub-locations. The point of all this is to give an understanding of what is going on across the market and what expected rental prices should be. Only it doesn’t do that. With all that is happening now in 2009, the prices given seem to be more of a reflection of the 2008 rental property market. The general consensus is that the index has vastly overinflated rental prices, much to the frustration of tenants who were perhaps finally hoping for a rent decrease for once. RERA has come out and stated that the index is by no means legally bounding, and is there only as a guide.

However the fear, and in all fact likely outcome, is that landlords will now use the index to justify rental price increases, even if this is not what market forces are dictating. Many are now calling for REAR to readdress the index and to bring it more into line with what is happening in Dubai at the current time. Whether this actually happens or not remains to be seen, but it is surely a blow to those renting Dubai properties, who are already having to come to terms with a difficult outlook to 2009.
 

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