Question: All I see in my Instagram and TikTok feeds are real estate agents announcing new projects. I also see construction happening everywhere and all handovers seem to be scheduled for 2025/2026.
I’m not an economist or a psychic, but I have a very strong feeling that there’s a massive oversupply of thousands of units that will become available simultaneously, way more than the population growth, which will eventually lead to the market crashing. I remember, from 2017 to 2020, it was the same and all these buildings were empty and rents steadily decreased.
I was considering buying a property this year but now I’m adamant that it’s not a good idea to do so now. I’d love to get your thoughts on the market. DB, Dubai
Answer: Many people write to me frequently asking my opinion of what will happen in the market, questions like; are we in a bubble? Is it too late to invest now? What will this year bring? Of course, I don’t have the magic formula, but I will say that as in every walk of life, doing your due diligence by getting all the facts before deciding on anything is key, but let’s look at what is or has been happening in the real estate market in order to understand better how we can go forward.
For a while now, the UAE property market in general has been increasing in volume and sales transactions, and there are many factors behind this.
If we go back a few years, it was the way the federal government behaved towards the arrival of the pandemic. We acted quickly to shut down, but we were also the first to open back up. Businesses bounced back quickly, mainly due to the confidence within the nation. We opened up our borders through aviation and tourism came back.
On the business front, we improved by being taken off the Financial Action Task Force’s grey list by implementing anti-money laundering measures that showed the world we are transparent in our dealings and have protection in place for investors. Our ease of doing business is first class. We encouraged entrepreneurship by approving thousands of new trade licenses and allowed more flexibility in matters relating to residency with the introduction of Golden Visas and other longer-term visa programmes.
Legislation is constantly being improved in business, finance and real estate, latterly with the introduction of the new smart rental index, which will bring about not just transparency, but also rebalance proceedings by being fair to all stakeholders. This, in turn, will increase investors' drive to enter the buy-to-let market.
Infrastructure spending on transport, be it roads, rail or Metro, improvements to commerce with more malls planned and general improvements for connectivity will always drive the economy.
All of these points and much more will act as a catalyst to attract more and more individuals to Dubai or the wider UAE in general. So with all of this happening, I can only say that the real estate market is in very good shape to continue along the path of growth.
I would like to add one word of caution to finish and that is what goes up will obviously have to come down. This is the science of economy, but while this is true, the level of growth can also just slow but as long as the population continues to grow as it has been, we will be in this positive territory for some time to come.
Q: I tried to negotiate my renewal rent with the manager of our real estate agency, but he used an expired rental evaluation certificate to suggest that the property value is above the market value. I sent an email with the rent calculator data, but he refuted it.
Instead, he warned that we would receive a notary warning from Dubai Court. A warning was pasted on my door and I received an email. I told the manager that we would go to the Real Estate Regulatory Agency if he didn't share the updated rent evaluation certificate.
He said they would go to court to assign an expert who will evaluate the property value. He is confident that this is more than 40 per cent of the property’s current market value.
Is he using new ways to threaten us or is this correct? Please advise. TB, Dubai
A: There are a few points to consider here. Firstly, any changes to a rental contract must be communicated in writing to all parties, giving at least 90 days' notice of the changes and all parties need to agree.
Secondly, as per decree 43 of 2013, the maximum a landlord can raise the rent by in any one given year is 20 per cent and then only as per the relevant part stated in the decree.
The last and most important point is, that if the notice for a change in rent was communicated within the 90-day window, the new smart rental index found on the Dubai REST app will determine the level of increased rent (if at all).
Therefore, please check this and refer the findings back to your landlord. If he still insists on an increase higher than what the new rental index states, I suggest you file a case yourself at the Rental Dispute Centre on the first floor of the Dubai Land Department building in Deira.
