Bullish landlords fuel rent disputes

Published Monday, July 29, 2013

By Parag Deulgaonkar

The number of rental disputes has risen in Dubai in the past one year, according to CBRE.

In its latest Dubai MarketView, Mat Green, Head of Research & Consultancy UAE, CBRE Middle East said, “Over the past 12 months, landlords have become increasingly bullish, leading to an increasing number of rental disputes being raised at the Rent Committee.”

No figures were given, however, a number of notices are being published in local newspapers on a daily basis.

Disputes have been on the rise since landlords have been increasing rents randomly, even issuing 30-day notices to tenants to vacate apartments.

Although it is not mandatory that landlords follow it, the Rent Committee refers to Dubai’s Real Estate Regulatory Agency’s rent index when issuing a decision on any rent case.

Landlords have to give a 90-day notice when they plan to increase rents, or at least 12 months’ notice prior to the determined date of eviction if they want to use the property for personal use.

Emirates 24|7 first reported such a move by landlords in October 2012, where they asked tenants to pay the excess rent or vacate.

In the past one year, average residential rentals rose by over 30 per cent, with the first six months witnessing a 14 per cent increase.

New master planned communities emerged as the best performing locations, which is a market shift from performance trends during 2012.

Although prime locations continued to see growth, Jumeirah Village and Dubai Sports City topped as the popular cost-sensitive options for tenants.

Rising rents in Dubai also pushed some residents to either downsize or relocate to affordable communities.

In fact, Sharjah rents rose by 16 per cent in the past one year, driven mostly by relocation from Dubai.

Villa properties continued their upward movement in both rents and sales pricing, with six consecutive quarters of growth.

Average villa rents rose by nearly six per cent during the quarter, with smaller two bedroom units registered the highest rate of growth, rising 36 per cent year-on-year.

Earlier this month, Dubai Land Department said total value of property transactions rose by over 30 per cent to reach Dh108 billion compared to Dh80 billion registered in first half 2012.

Demand high for offices

The office sector showed improvements with rising demand with new leasing enquiries and live requirements.

“The majority of these enquiries have been generated by firms seeking expansion or consolidation space, with a number of major international corporates seeking new headquarters in prime locations.

“Despite the high headline vacancy rates, the availability of good quality office accommodation on contiguous floors is limited and this is encouraging developers to push ahead with developments,” Green said.

Quality office accommodation in Jumeirah Lakes Towers, Business Bay and Tecom saw rents rising six per cent in the second quarter.

However, rentals in the CBD remained flat at Dh1,500 square metre per annum.

CBRE expects the office market to witness a growth of prime rental rates during the second half of the year as the most attractive buildings near full occupancy.

Average secondary office rents stand at Dh1,050 sqm per annum, with inferior quality strata accommodation in less desirable locations still around.

(Home page image courtesy Shutterstock)

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