Rera to update index as Dubai rents plummet

Rera plans to release the revised index at the beginning of April, after lease contracts that have been signed this year have been registered on the agency's website.

The original rental index was released in full in January and caused controversy in the emirate's real estate sector.

Following the non-renewal of the rent cap laws, new tenancy contracts were to be set according to how the current contract rated on the scale of average leases for any particular area and property type.

The original index was received negatively in the market as the prices were based on Rera's survey of average prices, which had been undertaken in mid-2008, when prices were peaking, and did not reflect realities on the ground.

The revised index will go some way towards redressing this, although prices are predicted to continue falling, with some areas likely to see enormous decreases.

'Depending on the location of the community, this could range from 10% or 20% up to 50% by year end,' said bin Ghalita.

Supply slow down

Bin Ghalita added that the agency expected to see a 20% drop in the number of units scheduled for delivery in 2009 which would actually come onto the market.

Due to current market conditions a number of the 31,000 units forecast for 2009 delivery may see delays in their roll out. The figure increases for the number of units forecast for delivery in 2010 that are likely to see delays or rescheduling. Up to 40% of the expected 43,880 units could now be pushed back.

In a bid to monitor the supply of upcoming property, and stop market saturation, Rera will limit new development permits. The agency will also host an Independent Progress Monitoring Report on its website. Government inspectors will tour sites and post monthly written and photographic progress reports from projects across the emirate.

The report will monitor all escrow projects in Dubai, accounting for 695 of the 875 that are registered with Rera. The remaining 180 either have full bank guarantees or are nearing completion.

Rera has also cut hundreds of developers from the registered list, either through mergers or due to their inability to continue with the launch of their project. From an original 875, 427 are now on the list, with many of these reporting a surge in the number of investors who are defaulting on payments.

Though only two projects have officially been cancelled so far, bin Ghalita expects that a further 27 will need to be cancelled.

See also:
Dubai's real estate industry 'at low point'
Residential prices slump by 50% as city becomes a buyers market