Rent Caps not needed.

[Wannaberich]

Don't quite understand this report.Does it mean the 5% from 2008 continues,
or does it mean landlords can now put prices up as high as they wish?


Gulfnews: Rera chief executive says rent caps are not needed 'in a tough year'

 

[sasherwani2]

It means the rents can be raised as much as the landlord requires. The rule really doesnt matter for 2009 anyway because the rents will be having a free fall by the mid of this year. The rule was to "motivate" the landlords and investors by giving them some hope that they can still recover their money on the finished properties by jacking up the rents.

 

[Gashead]

It means the rents can be raised as much as the landlord requires. The rule really doesnt matter for 2009 anyway because the rents will be having a free fall by the mid of this year. The rule was to "motivate" the landlords and investors by giving them some hope that they can still recover their money on the finished properties by jacking up the rents.

It also means people like me who charge somewhat under market levels may be able to increase rents to allow for the 100% increase in Idama service charges on JBR.

 

[mpat]

Provided u get tenants who are happy to pay that much of increased rents , Rents has started falling....

 

[Wannaberich]

Had an email back from the property management company renting an appartment for me.
Enquiries to rent are drying up and people are handing back properties due to job losses.
Looks like rents are going to fall even though those advertised in Gulf News seem to still be high.
This together with collapsing property prices is all bad news.
As I keep saying,if you're in it for the long term then you're ok.

 

[georgihh]

It also means people like me who charge somewhat under market levels may be able to increase rents to allow for the 100% increase in Idama service charges on JBR.

how much are the service charges in JBR?

 

[Wannaberich]

Gulfnews: 5% rent cap remains in force, says official

 

[sasherwani2]

Residents have been confused whether it is lawful for landlords to steeply increase the rents while landlords maintained that they could do it since the rent cap law of 2008 is no more valid.

Dubai residents will "always" be confused because laws here are as sharp as Paris Hilton's IQ.

 

[Gashead]

how much are the service charges in JBR?

Dhs. 21.75/ft2 up from about Dhs. 10.

 

[Gashead]

Gulfnews: 5% rent cap remains in force, says official

I can't even be bothered to read it LOL, so typical.

 

[sasherwani2]

They are laying off atleast 1,500 employees daily (1). Thats around 45,000 ppl a month laid off. Suppose each person has atleast 2 dependants, that means 135,000 ppl will be leaving the country per month. Even if 25% of the laid off employees "do find a job" within a month after being laid off (which is HIGHLY UNLIKELY in this economy),that would still mean 101,250 people will be leaving Dubai every month. Imagine how many "To Let" signs wil be visible in Dubai in the next 3-4 months. As I said Q3 of 2009 will be the year Dubai rents shall become ridiculously cheap.

The rent cap is "the last thing" the authorities should be worried about. Maybe they should make a 50% rent cap on the lower side because thats how much the rents shall fall this year (depending on the location). They have already falled 17% - 25% (2)


(1) Dubai cancels 1,500 work permits daily
(2) http://www.xpress4me.com/news/uae/dubai/20011332.html

 

[samsaf]

They are laying off atleast 1,500 employees daily (1). Thats around 45,000 ppl a month laid off. Suppose each person has atleast 2 dependants, that means 135,000 ppl will be leaving the country per month. Even if 25% of the laid off employees "do find a job" within a month after being laid off (which is HIGHLY UNLIKELY in this economy),that would still mean 101,250 people will be leaving Dubai every month. Imagine how many "To Let" signs wil be visible in Dubai in the next 3-4 months. As I said Q3 of 2009 will be the year Dubai rents shall become ridiculously cheap.

The rent cap is "the last thing" the authorities should be worried about. Maybe they should make a 50% rent cap on the lower side because thats how much the rents shall fall this year (depending on the location). They have already falled 17% - 25% (2)


(1) Dubai cancels 1,500 work permits daily
(2) Xpress: News | Meltdown upside: Rents fall in Dubai

Don't forget that the vast majority of those are unskilled labours directly working on the huge construction site which are now redundant. So the estimates you gave will not accurate. I would like to offer the following correction:

101,250 people, 50% of them are unskilled labours, living in labour camps (50,625 are skilled labours or Professionals)

Out of those 50,625, I believe that at least 50% of them are living in shared accommodations, (lets say each 3 our of those 50% are living in 1 Shared accommodation) which means practically that the number of accommodations which will become "to let" will become:

50,625 * 0.5 + [(50,625 * 0.5) / 3) = 33,750 apartments.

Still not a small number...

But I do agree that we are going to witness a huge drop down in prices rental prices...

From what I could see so far, judging by the economic cycles, people who bought in June or August last year will either have to wait between 3-5 years until the prices go up again (even for those who bought directly from the developers like me with no premium).. or they have to sell for a very considerable losses...
and it will go up due the progressive development in the area and in Dubai in general.

As for the next 3-5 years, renting will only cover 30-40% of the yearly mortgage for those who recently did their purchase

 

[Wannaberich]

The rent cap is "the last thing" the authorities should be worried about. Maybe they should make a 50% rent cap on the lower side because thats how much the rents shall fall this year (depending on the location). They have already falled 17% - 25% (2)

]

Infact rents for appartments have stayed the same and risen 8% for villas.
http://www.arabianbusiness.com/543280-uae-rent-rises-slow-to-a-standstill---report


If rents did drop 50% like you unsurprisingly predict,then this may also start attracting people to consider moving to Dubai if they can find a job or are looking for somewhere to start thier own business.

In the long term,lower property prices and rent prices could have a huge benefit to Dubai.It will make moving here far easier for individuals and companies looking for cheap accomadation for their workers.In time as Dubai fills up this will push prices up again but at a slower and more sustainable rate.This is what was needed in the first place and not the mad hike in prices that we have seen.

 

[sasherwani2]

Don't forget that the vast majority of those are unskilled labours directly working on the huge construction site which are now redundant. So the estimates you gave will not accurate. I would like to offer the following correction:

101,250 people, 50% of them are unskilled labours (50,625 are skilled labours or Professionals)

Out of those 50,625, I believe that at least 50% of them are living in shared accommodations, (lets say each 3 our of those 50% are living in 1 Shared accommodation) which means practically that the number of accommodations which will become "to let" will become:

50,625 * 0.5 + [(50,625 * 0.5) / 3) = 33,750 apartments.

Still not a small number...

But I do agree that we are going to witness a huge drop down in prices rental prices...

From what I could see so far, judging by the economic cycles, people who bought in June or August last year will either have to wait between 3-5 years until the prices go up again (even for those who bought directly from the developers like me with no premium).. or they have to sell for a very considerable losses...
and it will go up due the progressive development in the area and in Dubai in general.

As for the next 3-5 years, renting will only cover 30-40% of the yearly mortgage for those who recently
rolleyes:

Good observation. I think a figure of around 30,000 apartments getting vacant monthly would be a more realistic figure provided the 1,500/ daily visa cancellation trend doesnt "increase" significantly in the coming months.

 

[Wannaberich]

Don't forget that the vast majority of those are unskilled labours directly working on the huge construction site which are now redundant. So the estimates you gave will not accurate. I would like to offer the following correction:

101,250 people, 50% of them are unskilled labours, living in labour camps (50,625 are skilled labours or Professionals)

Out of those 50,625, I believe that at least 50% of them are living in shared accommodations, (lets say each 3 our of those 50% are living in 1 Shared accommodation) which means practically that the number of accommodations which will become "to let" will become:

50,625 * 0.5 + [(50,625 * 0.5) / 3) = 33,750 apartments.

Still not a small number...

But I do agree that we are going to witness a huge drop down in prices rental prices...

From what I could see so far, judging by the economic cycles, people who bought in June or August last year will either have to wait between 3-5 years until the prices go up again (even for those who bought directly from the developers like me with no premium).. or they have to sell for a very considerable losses...
and it will go up due the progressive development in the area and in Dubai in general.

As for the next 3-5 years, renting will only cover 30-40% of the yearly mortgage for those who recently did their purchase

30.000 appartments doesnt sound right considering the amount of job losses reported.I'd say its much less.It's impossible to give an amount.
However,if we assume that by the summer a typical 1 bed is 50.000,then what a great boost to Dubai for people looking to locate there.
Due to the chronic shortage of villas,large reductions are unlikely.
Infact,if you look at prices generally on Gulf News prices are holding up as confirmed by the report in arabian business.
3 beds at Arabian Ranches were between 250-300 2 months ago,now they are up to 325.000.

 

[samsaf]

Do you mean that despite the rentals will decrease, the property prices will still hold up?

I thought that one of the property prices inflation was due to rental costs going sky high to begin with?

Logically, if the rentals go down, the property purchase costs will go down, due to less Return of Investment values, and much less costy construction materials (iron is now at all time low, checkout London Metal Exchange)

 

[Wannaberich]

Do you mean that despite the rentals will decrease, the property prices will still hold up?

I thought that one of the property prices inflation was due to rental costs going sky high to begin with?

Logically, if the rentals go down, the property purchase costs will go down, due to less Return of Investment values, and much less costy construction materials (iron is now at all time low, checkout London Metal Exchange)

I don't quite understand your post.I was just saying according to the Arabian Business report I posted plus rental prices I've seen in Gulf News,rental prices are holding up well.Whether they will start to drop is another matter.
Although it has been pointed out the amount of people losing their jobs and moving away from Dubai will have a negative impact on rental prices,it has to be remembered people are unable to buy instead of renting as banks are simply not lending money.Therefore if you can't buy you have no option then to rent.
The banks have pushed alot of people onto renting which is maybe why prices are holding up.

 

[Gashead]

Good observation. I think a figure of around 30,000 apartments getting vacant monthly would be a more realistic figure provided the 1,500/ daily visa cancellation trend doesnt "increase" significantly in the coming months.

Don't forget to add the 30,000+ new apartments coming on stream this year.

 

[Wannaberich]

Don't forget to add the 30,000+ new apartments coming on stream this year.

Again its not easy to give an accurate figure especially in these turbulent times.
What has to be remembered is that should rents fall greatly as some are predicting,this will mean many of those who work in Dubai but live in places like Sharjah and AD where rents are cheaper will probably re-locate to Dubai.

Therefore it's not necessarily the case that new jobs will need to be created to fill these units.

 

[financier888]

Had an email back from the property management company renting an appartment for me.
Enquiries to rent are drying up and people are handing back properties due to job losses.
Looks like rents are going to fall even though those advertised in Gulf News seem to still be high.
This together with collapsing property prices is all bad news.
As I keep saying,if you're in it for the long term then you're ok.

The rent prices quoted in the gulf news are indeed misleading - you're not seeing what the actual rents are going for - just asking prices which are still based on the 'past' (except for IC and Discovery Gardens...) You may be able to attract a renter by advertising the apartment yourself (by OWNER) , thus no commission, be prepared to take multiple checks with a discount for i year pre-payment and adjust your price to where the market is now... As the months pass, the rents will drop further as many owners that have several apartments will realize that they will not be able to sell them - and more will come on the market creating more downward pressure on prices..

good luck!