In a press conference held at the end of February, Rera gave indications
that its rental price index would be updated and re-released in early April.
This was due, in part, to the disputes surrounding the first version of the index, which was compiled at the height of the surge in rental prices in mid 2008, before the city's property market began to feel the effects from the financial crisis and real estate prices suffered from the enormous drops of Q4 2008, with sales transactions dropping by 40%.
The ensuing figures, which were released to the public in January, were left vastly at odds with the annual contracts being offered on the market post-slump. Following the non-renewal of the rent cap laws, the prices for new and renewed 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.
Tenants who were paying below the average for properties of the same band could see their leases upped according to how far below the mean level they fell, up to a maximum of 20%.
'We will know from the beginning of April, because people have just started registering on ejari and it is from this that we will know the drop,' Marwan bin Ghalita, Rera's CEO told reporters. Ejari is the site on which landlords must register all tenancy contracts.
'The first index was based on the market study in 2008, now we cannot do it based on that study. We will take the exact figure registered to get the correct pricing. Some agents are saying that in some areas there is no drop in rent, in other areas there is a 25% drop, in others 35%, and in some areas it is 50%. But whenever I ask them where the document registering the drop is, they say 'it's not registered yet'.'
'The advantage for the tenant is that he can now find affordable units.'
But AME Info has learned that, rather than fully updating the existing index figures in April, Rera may just be filling in the averages for the areas and bands that were not covered by the original chart
'We are not making any changes to the existing figures, we are just going to be updating the areas that were not mentioned in the last index,' said Karim Awwad, an official at the agency. 'We will be conducting a new survey in summer of this year.'
This will mean that rental contracts are likely to be measured against average figures that bear very little resemblance to current market rates. One bedroom units in Discovery Gardens are available for annual leasing at close to 50% less than nine months previously, with some being offered for Dhs57,000 rather than Dhs110,000. Two bedroom apartments in Dubai Marina have also fallen, although less sharply, with some examples going from Dhs220,000 in September 2008, to Dhs170,000 in February.
Villa asking prices have also fallen, with 1E three bedroom properties in the Springs rising to Dhs340,000 by August 2008, whereas contracts are now available at Dhs180,000, with landlords willing to negotiate based on area (such as proximity to the new main road running through the development) and accepting multiple cheques.
Industry insiders expressed surprise that the index might not be updated as previously expected.
'Everyone recognises that rental rates are falling in Dubai,' Better Homes MD Ryan Mahoney told AME Info. 'As a result I would encourage Rera to regularly update the index, because if it's not updated and kept in line with this fast-moving market people will simply stop referring to it.'See also:Average property value drop in Dubai at 30%Dubai home financing to return with affordabilityPost-slump Dubai rental yields to stabilise at 8%