Dubai announces 20% potential increase in rents due to Rera revision
Industry executives have highlighted the potential for rent increases ranging from 10 to 20 percent in the near future due to revisions in specific areas.
The Real Estate Regulatory Authority (RERA) index for Dubai underwent an update, which experts anticipate will affect tenants who have resided in properties for over two years.
Richard Waind, CEO of Betterhomes, explained that the RERA calculator underwent modifications on March 1 with the aim of aligning future renewals more closely with current market rents. This calculator establishes a benchmark rent for each community, providing guidance to landlords and tenants on permissible rent increases upon renewal.
Waind emphasized that tenants who have been living in properties for over two years may now face larger rent hikes upon renewal compared to before the revision. This could prompt some tenants to consider relocation or downsizing, while others may opt for property ownership. Notably, central villa communities and waterfront apartment communities, which have witnessed substantial rent escalations over the last two years, are expected to experience the greatest impact.
Anticipating rent increases of 10 to 20 percent in certain areas, industry experts underscored the potential effects of the calculator revision. However, Waind suggested that the revised calculator might contribute to long-term rent stabilization.
The previous version of the calculator had led to a significant gap between renewal prices and market rates, resulting in market stagnation. This stagnation has limited property supply, particularly in popular villa communities. Consequently, increased renewal costs could spur market activity, potentially augmenting housing supply and moderating market rents.
The industry executives further noted that the revision in certain areas could lead to rent increases in the near future. However, Waind expressed optimism that the revised calculator could have positive long-term effects on the rental market. He suggested that the increased renewal costs might encourage market activity, leading to greater housing supply and potentially moderating rental prices.
