Dubai's residential index unveiled
The Real Estate Regulatory Agency (Rera) has compiled the rental index for Dubai's residential property for the second half of 2008, classified into various categories.
The agency last week released the index for commercial property.
According to a posting on Rera's website, the residential index looks at the apartment and villa rents in three areas – freehold, Deira and Bur Dubai. The classification is further broken down to individual localities and home sizes.
Analysts believe the rents listed in the index are far higher than prevailing market values.
"The index is a reflection of the market situation in 2008, most of which represented the historical peak in Dubai's rents," one analyst said. "The agency may need to re-visit the index values soon to reflect the situation after a global economic meltdown cast its shadow on the GCC economies as well."
Rera has emphasised that the index is only for indicative purposes and does not constitute any kind of legal compulsion.
Analysts believe, however, that landlords will use the index as a justification to increase rents irrespective of market conditions or forces.
A decree issued by the Ruler's Court on Monday has also clarified that new rental contracts – commercial as well as residential – signed in 2008 will witness no increase this year under a certain set of conditions.
Renewals of rental contracts may be increased in steps up to a cap of 20 per cent, the decree stated.
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