# Rent rises



## AdamWhitty89 (Jul 8, 2013)

Is rent in Dubai actually going to increase a load more if we do get this expo 2020?

Surely with the huge rental increases already this year, we are heading for another boom?


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## twowheelsgood (Feb 21, 2013)

The clue is in the name - "2020". That's six years away, so prices are likely to be higher through general inflation but any spike is likely to be transitory. Too many folks have been burned on the property market to do it again IMO. It's like accommodation for London 2012. The forecast was massive room prices, Lots signed up early got scalped and the hotels found staggeringly low occupancy rates just before the event, as people aren't stupid (much).

Prices plummeted before the event but it was too late.


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## TallyHo (Aug 21, 2011)

Things are getting busy in Dubai but I still wouldn't call it a boom. 

The expo 2020 can't be the driver for a boom. The expo complex is a one-off fairground to be built way out in the desert near the new airport and not related to anything else in the city. And the expo is only a marketing conference that lasts for six months. The Olympics it ain't. 

I've been in Dubai long enough to know this place is all about illusions built on shifting sands. It's a wild west town probably doomed to repeated cycles of booms and busts and I wouldn't be surprised if wild swings in rent prices become the norm.


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## Mr Rossi (May 16, 2009)

TallyHo said:


> doomed to repeated cycles of booms and busts and I wouldn't be surprised if wild swings in rent prices become the norm.


I'd agree with that, only with a little less variance as time goes on.

I've heard the rises of the last six months have been little more than property industry fuelling unfounded hype simply to increase end of year bonuses.


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## nicegalmemi (Nov 17, 2013)

Killer rise...seriously insane ...I dunno personally what am supposed to do .


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## arabianhorse (Nov 13, 2013)

nicegalmemi said:


> Killer rise...seriously insane ...I dunno personally what am supposed to do .


Like everyone else, unless company will increase allowance, no choice but to absorb , downgrade, or downsize


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## Fat Bhoy Tim (Feb 28, 2013)

Certainly confidence in businesses has risen considerably on the back of the expo, but any rents are more likely to be around general inflation, and/or more people moving to Dubai to work on related projects.


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## Chocoholic (Oct 29, 2012)

arabianhorse said:


> Like everyone else, unless company will increase allowance, no choice but to absorb , downgrade, or downsize


Actually no. People are freaking out and landlords are trying every trick in the book right now to increase rents, turf people out etc. Remember the RERA rent calculator - that tells you what you should be paying and that's what everyone should go by and IF people try it on, you refer them to the rent committee who are falling on the side of tenants at the moment.

I've got friends left, right and centre saying they've had enough and it's time to go.

People need to know their rights and stand their ground and not give in to 'speculation' and bullying.


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## Gavtek (Aug 23, 2009)

I'm probably about to find out the hard way, but it seems most landlords and real estate agents are chancing their luck and hoping people are stupid enough to pay higher rents.

Last week, I had a look on Dubizzle. Most unfurnished 2 bedroom apartments in JLT were listed at AED 140k, nothing special or appealing about them. 

One of the more "respected" real estate companies had a 2 bedroom furnished apartment in the Bonnington Hotel for AED 135k, not sure if serviced or not.

So that suggests to me that you just need to avoid the chancers and crooks on Dubizzle.


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## arabianhorse (Nov 13, 2013)

Chocoholic said:


> Actually no. People are freaking out and landlords are trying every trick in the book right now to increase rents, turf people out etc. Remember the RERA rent calculator - that tells you what you should be paying and that's what everyone should go by and IF people try it on, you refer them to the rent committee who are falling on the side of tenants at the moment.
> 
> I've got friends left, right and centre saying they've had enough and it's time to go.
> 
> People need to know their rights and stand their ground and not give in to 'speculation' and bullying.


thanks - you're right.

Do the landlords deal with tenant direct o n these matters? shouldn't they be going through their agents. sorry not familiar with uae practice.

also how easy is rent committee to deal with? i mean is it a bureaucratic nightmare like everything else ?


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## Chocoholic (Oct 29, 2012)

arabianhorse said:


> thanks - you're right.
> 
> Do the landlords deal with tenant direct o n these matters? shouldn't they be going through their agents. sorry not familiar with uae practice.
> 
> also how easy is rent committee to deal with? i mean is it a bureaucratic nightmare like everything else ?


Sometimes and sometimes not. After initially dealing with an agent, I've always dealt with LL's personally.

The rent committee and RERA can be very helpful and can usually give advice over the phone. They are certainly capable of putting people in their place.


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## Mr Rossi (May 16, 2009)

As a general rule, try to avoid single owner landlords. Chances are they're in negative equity, only looked to make a fast buck from flipping during the boom and are the type to go to the hassle of kicking you out because they've read some copy filling rubbish in the paper.

People with a portfolio or agencies that actually own the building know the value in long term tenants, an empty property is dead money and changing tenants is paperwork that costs money.

Of course there are exceptions to this on both sides but it seems to be a pattern I'm seeing when speaking to people that have been turfed our or aren't having that many problems.


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## TallyHo (Aug 21, 2011)

The rent increases of the past 18 months have been crazy to the point of ridiculous. What makes it difficult to justify the price increases is that we lack hardcore data which can help us, both the policy makers and the average man on the street, understand what's going on. 

We don't know what the population growth has been. The UAE government must know but they refuse to release any data showing year on year population figures. We don't know what the increase in trade has been. How many more cargo ships are docking in the ports? Dunno. We don't know what the increase in retail has been. Are the shops in the malls grossing higher sales and profits? Are the dealerships selling more cars than ever? We have no numbers that are normally available in most countries, which would allow people to understand if there's a real economic expansion going on and thus rent increases could be understandable. 

A proper boom is based on rapid economic growth that stimulates demand in many sectors. The last Dubai boom was based on extraordinary growth in development when so much was being built in such a short time period. It eventually became unsustainable and collapsed (spectacularly). Other booms can be based on the discovery and extraction of natural resources or expansion in manufacturing or the increased supply of cheap credit. 

Then again there are booms based on irrationality and blind faith such as the infamous Dutch tulip boom of the 17th century. 

I'm inclined to believe that while the economy is picking up in the UAE (as personally observed based on the increased number of tenders and projects won), other indicators don't support a boom - wages are stagnant or only increasingly slightly, companies may be hiring few more people but it's not a hiring boom, overhead expenditures are still being kept to a minimum and subcontractors are still quite expensive so there isn't loads and loads of money being flashed around. In short, what I see on the ground is normal rates of growth.....except for the rent increases. 

My guess is that the property market overcorrected in 2009-2010, leading to real bargains in rents, and once the economy started to recover in 2011-2012 the property sector jumped on this mild recovery as an excuse to start fueling another 'boom' via speculation and blind faith, aided by many people's ignorance of RERA rent regulations and the highly transitional nature of the place with expats coming and going all the time, to push rents even higher and higher.


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## rsinner (Feb 3, 2009)

TallyHo said:


> What makes it difficult to justify the price increases is that we lack hardcore data


There you go. The inflation rate is 1.3%. My guess is that too many salary increases are linked to inflation, so there is an incentive to massage the figure downwards. Or maybe just to "reassure" everyone that "there is no bubble".

Higher rents and utility prices push up UAE inflation | The National

As an anecdote, I recently met someone who claimed to have flipped 40 properties in the Marina area during the boom years. After burning his fingers, he moved back to the UK, but now he is back in business and relocating back to Dubai. SO that must mean that things are "good" again.


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## Tropicana (Apr 29, 2010)

The link states that rental costs in Abu Dhabi increased by 0.6% in a year which I dont think is possible, as most people get a standard 5% increase when renewing


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## lazer220 (Apr 29, 2013)

AdamWhitty89 said:


> Is rent in Dubai actually going to increase a load more if we do get this expo 2020?
> 
> Surely with the huge rental increases already this year, we are heading for another boom?


It has started rising in Sharjah. You barely get any flat inside city now. Even outside the city rents have become too high.


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## niyati (Nov 2, 2013)

The trouble with understanding the economy and prices in Dubai is that there is no available public data. 

The government is obviously hoping for a boost to the economy on the back of the Expo. Why else would there be such a massive hype about an event most people haven't heard of outside of this city and even most of those here have no idea where the next Expo is scheduled to be.

The laws of the free market obviously do not apply to the real estate market in general. Price and demand are not related the way they should be. This results in bubbles and crashes. And this will continue to be the case unless the dynamics of the market change dramatically. As things are, it is highly likely that rent will increase on the back of the Expo and this bubble should last until the Expo begins. If I were investing my own money in real estate, I'd buy now and sell in 2019. If I can figure this out, so can other investors, which will make matters much worse and Dubai can expect negative economic climate during the Expo unless the correction happens much sooner.

As they say in this part of the world, Inshallah!


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## Mr Rossi (May 16, 2009)

niyati said:


> The laws of the free market obviously do not apply to the real estate market in general.


The "laws" of the free market do not apply to anything, it's a fallacy and myth perpetuated by those who are actually in control.


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## niyati (Nov 2, 2013)

Mr Rossi said:


> The "laws" of the free market do not apply to anything, it's a fallacy and myth perpetuated by those who are actually in control.


I am sorry that you have such a cynical view of the economy.


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## twowheelsgood (Feb 21, 2013)

niyati said:


> The trouble with understanding the economy and prices in Dubai is that there is no available public data.


For accommodation (the subject of the post) there is - its the RERA Rental calculator which gives you average rentals in any given area. Its not rocket science to track them if you like.

As far as food etc goes, you can simply add up bills, fual costs etc from your bills.

Its all there, but not on a spoon for you, in line with the general principle in Dubai of 'if you want it, do it yourself and do not expect the government to do for it for you'.

And just because you haven't figured out how the supply-demand mechanism works in Dubai doesn't mean that there isn't one. there certainly is a supply and demand system here except I suspect it doesn't fit the way you want things to be ?


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## niyati (Nov 2, 2013)

*The debate is heating up!*

Because public data isn't available, it is difficult to understand the drivers of prices. That does not mean it doesn't make sense, just that it is hard to figure out HOW it makes sense. 

All the information you mention concerns only the price. This means that it is probably relatively easy to track the movement in prices, from which one might extract trend, provided the trend is expected to continue. However there are various other drivers of prices, which are key to understanding the movements. In case of real estate prices (residential), these would be occupancy, demographics, GDP data, Average household income, employment statistics, to name a few. I am new to this city, but I am unaware of any sources of this information.

As for the supply and demand mechanism working here in Dubai, that is debatable. If you believe that real estate bubbles happen (they have undeniably occurred in the past, but one could argue that they won't in the future), then the supply and demand mechanism does not work. My personal opinion is that there is another bubble coming. This is, of course, informed guesswork. If there is another bubble coming, then by definition, the supply and demand mechanism does not apply to the real estate industry in the city.


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## Mr Rossi (May 16, 2009)

niyati said:


> I am sorry that you have such a cynical view of the economy.


If you're only ever cynical about *one* thing in life, it should be money and peoples pursuit of it.


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