Finally, there is light at the end of the tunnel. Rent prices in Dubai are going down, but how low can they go?
Becky Lucas and Jeremy Lawrence
Anecdotal evidence seems to suggest that rent prices in Dubai are stabilising after years of rapid growth. But is this a definite trend or wishful thinking? A recent report by Swiss bank UBS predicted that job cuts in the emirate could mean that the number of residents in Dubai will fall by as much as eight per cent this year and two per cent in 2010. While these are only estimates, fewer people will mean more available homes just as more brand new properties arrive on the market.
Robert Mckinnon, head of research at Al Mal Capital, thinks this will all have a difference on price – but not necessarily just yet. ‘When you look at changes in rent prices internationally, you usually find that they are ‘sticky’ – they don‘t go down easily because when people get laid off they don’t leave,’ he says.‘In Dubai that model doesn’t apply in the same way because if you lose your job and don’t find another one you have to leave. As a result it’s more difficult to predict how things will change.’ He continues, ‘It could take as long as six months to see real price reductions, as landlords rarely lower rents for existing tenants and there is no incentive for people to move around to save some money. However, the first move has been from one cheque to two and even six in some cases.’
Government regulation will also be an important. Most pressingly, was the matter of whether 2008’s five per cent rent cap would stay. We now know that current rents are being frozen, so it is illegal for your landlord to put your rent up.
The next thing to consider, is the rental index, released by the Real Estate Regulatory Agency (Rera). The first section has already been released, while the remaining guidelines should be published next month.
It is intended to help landlords and tenants by providing realistic guide prices for property according to type and area and is expected to eventually replace the rent cap. However, the first phase only included commercial spaces and Marwan Bin Galita, CEO of RERA, said, ‘This index is for guidance, not regulation.’ So this is only the first step towards a new regulatory system.
For anyone looking to find somewhere to live that doesn’t cost a fortune, word on the street is that bargains can be found at Discovery Gardens in Jebel Ali. There is also lots of availibility in the Old Town/Burj Dubai area.
It is also worth knowing that most, if not all, advertised prices are negotiable. Don't be afraid to bargain, as one agent told us "it's a renter's market" at the moment.
Landlords who bought, hoping to sell at the peak of the housing boom, have held on too long and are now looking to offload their investments, either for sale or to rent.
This means that you can afford to be picky. Offer below the asking price, negotiate over the amount of cheques you can pay in, and above all, don't be shy!