The recent update to Dubai's Real Estate Regulatory Authority rent calculator is a double-edged sword for deal-hunting tenants, according to analysts who say the rise in rents will be balanced out by the growth of communities offering better value for money.
The Rera calculator, which was recalibrated on March 1 to become more representative of open-market pricing, is revised periodically for certain communities and buildings to reflect current market rental rates.
It shows whether or not a rent increase is allowed and uses criteria such as location, property type, current rent and number of rooms, and works by comparing properties with similar ones nearby.
Rents in Dubai surged 19 per cent year-on-year in 2023, compared with 27 per cent the previous year, property consultancy Cushman & Wakefield said in its latest market report.
It said many tenants were opting to stay put because rental increases during renewals are much lower compared to signing new leases, but several renewing this year will face higher rent due to the adjustment in Rera's calculator.
"Last year, we observed rental ranges widening for some areas by increasing the top end of the allowed price increase," Haider Tuaima, director and head of real estate research at Dubai-based ValuStrat, told The National.
"The residential rental market is on an upswing stage of the cycle. Therefore, increasing the upper end of the permitted rental range allows landlords to increase their rates closer to prevailing market rents and improve their yields in the process."
Cherif Sleiman, chief revenue officer of Property Finder, said the recent change in the rental index also reflects the efforts of Rera to balance a fair rent increase across different communities "while fostering a healthy environment for investors, ensuring competitive rental yields aligned with global standards".
"The nation's commitment to fostering long-term residency and investment has fuelled this trend, resulting in a growing demand and heightened interest in investment," Mr Sleiman told The National.
Renters become buyers
With many tenants with historically low rents set to face significant increases in their next renewal, John Lyons, managing director at Dubai-based Espace Real Estate, said it may encourage more to a foothold on the property ladder.
"This will increase the churn rate of rental stock within many communities, while also accelerating the trend of 2023, whereby many tenants decided to buy, opting for the lower monthly costs associated with home ownership," Mr Lyons said.
"Although the updated rent calculator will inevitably cause some level of disruption for many tenants, the great pivot of housing stock from the rental sector to the end-user sector will help to create increased levels of stability for Dubai’s residential property market over the longer term."
Jacob Bramley, senior leasing manager at Dubai-based Betterhomes, said the consequence was two-pronged: any increase may prompt tenants to vacate their property to save money, which in turn would give an opportunity for landlords to re-rent at a higher price, offering better return for their investment.
"The revision, now more aligned with current market prices ... differs from the previous scenario where tenants were more inclined to stay," Mr Bramley told The National.
Better value
However, this could also lead to increased demand in "newer" and developing communities that offer better value for money, as tenants opt to downsize or move further from their ideal search location, Mr Bramley said.
"With more tenants choosing to move, this may lead to long-term increases in market prices, as landlords can charge tenants the current market value compared to when tenants opted to renew at a lower price previously."
Another possible outcome is "increasing the number of available rental properties if tenants are no longer able to afford the rent and decide to vacate the property", ValuStrat's Mr Tuaima said.
Dubai's property sector, a key pillar of its economy, emerged strongly from the Covid-19 pandemic amid robust economic momentum, allowing it to remain an attractive asset for domestic and international investors.
The emirate had a bumper year in 2023, registering a record 1.6 million property transactions across market segments, an almost 17 per cent jump on an annual basis, the Dubai Land Department reported last month.
The total value of real estate deals in the emirate reached Dh634 billion ($172.6 billion), with the number of transactions hitting 166,400 in 2023. This marked an annual growth of 20 per cent in the value of deals and 36 per cent in the number of transactions.
How to use Rera calculator
Rera was established in 2013 to regulate the market and prevent it from overheating.
The rental calculator shows whether a rent increase is applicable and works by comparing properties with similar ones nearby.
Tenants and landlords can access the calculator on the Dubai Land Department website.
The maximum percentage of rent increase for Dubai properties depends on the area, property type and size, and current market value.
If the rental price is:
- Less than 10 per cent below the market value for the area, no increase is allowed
- Between 11 per cent and 20 per cent below market value for the area, a landlord can increase by 5 per cent
- Between 21 per cent and 30 per cent below market value for the area, a landlord can increase by 10 per cent
- Between 31 per cent and 40 per cent below market value for the area, a landlord can increase rent by 15 per cent
- Forty-one per cent or more below market value will permit a 20 per cent increase in rent
According to the Rera calculator, a landlord cannot increase the rent by more than 20 per cent in any given year.
However, if the landlord and tenant agree on a higher increase during private negotiations, that can exceed 20 per cent.
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Hometown: Bogota, Colombia
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What it means to be a conservationist
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Enric Sala is an expert on marine conservation and is currently the National Geographic Society's Explorer-in-Residence. His love of the sea started with his childhood in Spain, inspired by the example of the legendary diver Jacques Cousteau. He has been a university professor of Oceanography in the US, as well as working at the Spanish National Council for Scientific Research and is a member of the World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy. He has dedicated his life to protecting life in the oceans. Enric describes himself as a flexitarian who only eats meat occasionally.
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According to the United Nations Environment Programme, all life on earth – including in its forests and oceans – forms a “rich tapestry of interconnecting and interdependent forces”. Biodiversity on earth today is the product of four billion years of evolution and consists of many millions of distinct biological species. The term ‘biodiversity’ is relatively new, popularised since the 1980s and coinciding with an understanding of the growing threats to the natural world including habitat loss, pollution and climate change. The loss of biodiversity itself is dangerous because it contributes to clean, consistent water flows, food security, protection from floods and storms and a stable climate. The natural world can be an ally in combating global climate change but to do so it must be protected. Nations are working to achieve this, including setting targets to be reached by 2020 for the protection of the natural state of 17 per cent of the land and 10 per cent of the oceans. However, these are well short of what is needed, according to experts, with half the land needed to be in a natural state to help avert disaster.
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Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.
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Ministry of Health and Prevention – 80011111
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Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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Match info:
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If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
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Result: India won by 203 runs
Series: England lead five-match series 2-1
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The biog
DOB: March 13, 1987
Place of birth: Jeddah, Saudi Arabia but lived in Virginia in the US and raised in Lebanon
School: ACS in Lebanon
University: BSA in Graphic Design at the American University of Beirut
MSA in Design Entrepreneurship at the School of Visual Arts in New York City
Nationality: Lebanese
Status: Single
Favourite thing to do: I really enjoy cycling, I was a participant in Cycling for Gaza for the second time this year
Profile of Bitex UAE
Date of launch: November 2018
Founder: Monark Modi
Based: Business Bay, Dubai
Sector: Financial services
Size: Eight employees
Investors: Self-funded to date with $1m of personal savings
The specs: 2018 Alfa Romeo Stelvio
Price, base: Dh198,300
Engine: 2.0L in-line four-cylinder
Transmission: Eight-speed automatic
Power: 280hp @ 5,250rpm
Torque: 400Nm @ 2,250rpm
Fuel economy, combined: 7L / 100km
Read more about the coronavirus
The biog
Favourite car: Ferrari
Likes the colour: Black
Best movie: Avatar
Academic qualifications: Bachelor’s degree in media production from the Higher Colleges of Technology and diploma in production from the New York Film Academy
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
RACECARD
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Ready Player One
Dir: Steven Spielberg
Starring: Tye Sheridan, Olivia Cooke, Ben Mendelsohn, Mark Rylance
THE%20SPECS
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If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
COMPANY PROFILE
Company name: BorrowMe (BorrowMe.com)
Date started: August 2021
Founder: Nour Sabri
Based: Dubai, UAE
Sector: E-commerce / Marketplace
Size: Two employees
Funding stage: Seed investment
Initial investment: $200,000
Investors: Amr Manaa (director, PwC Middle East)
Leaderboard
63 - Mike Lorenzo-Vera (FRA)
64 - Rory McIlroy (NIR)
66 - Jon Rahm (ESP)
67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)
68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)
69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)
The UN General Assembly President in quotes:
YEMEN: “The developments we have seen are promising. We really hope that the parties are going to respect the agreed ceasefire. I think that the sense of really having the political will to have a peace process is vital. There is a little bit of hope and the role that the UN has played is very important.”
PALESTINE: “There is no easy fix. We need to find the political will and comply with the resolutions that we have agreed upon.”
OMAN: “It is a very important country in our system. They have a very important role to play in terms of the balance and peace process of that particular part of the world, in that their position is neutral. That is why it is very important to have a dialogue with the Omani authorities.”
REFORM OF THE SECURITY COUNCIL: “This is complicated and it requires time. It is dependent on the effort that members want to put into the process. It is a process that has been going on for 25 years. That process is slow but the issue is huge. I really hope we will see some progress during my tenure.”
Eyasses squad
Charlie Preston (captain) – goal shooter/ goalkeeper (Dubai College)
Arushi Holt (vice-captain) – wing defence / centre (Jumeriah English Speaking School)
Olivia Petricola (vice-captain) – centre / wing attack (Dubai English Speaking College)
Isabel Affley – goalkeeper / goal defence (Dubai English Speaking College)
Jemma Eley – goal attack / wing attack (Dubai College)
Alana Farrell-Morton – centre / wing / defence / wing attack (Nord Anglia International School)
Molly Fuller – goal attack / wing attack (Dubai College)
Caitlin Gowdy – goal defence / wing defence (Dubai English Speaking College)
Noorulain Hussain – goal defence / wing defence (Dubai College)
Zahra Hussain-Gillani – goal defence / goalkeeper (British School Al Khubairat)
Claire Janssen – goal shooter / goal attack (Jumeriah English Speaking School)
Eliza Petricola – wing attack / centre (Dubai English Speaking College)