Despite sprouting business, job and investment opportunities the successful win of EXPO 2020 also evoked the fear of bubble in property market in Dubai leading state government to take suitable initiatives to control the momentum within real estate sector. Implementation of regulatory measures has become mandatory to control those landlords, who have been always looking to increase rents upon renewal of tenancy contracts.
Recent Regulatory measures implemented by Dubai Government
Having considered the huge rises in property demands during the whole year of 2013 and especially after the win of EXPO 2020, Dubai government has taken bold steps to implement new decree like rental caps and mortgage caps for international and local buyers to protect property market from another bubble. Other regulatory measures which are implemented to regulate the market include doubling of transfer fee, and ban to sell off plan properties by state-owned developer Emaar, The primary aim of implementing these regulatory measures is to control uncontrolled rises of property prices and rents.
How the new rental decree will regulate Dubai residential property market?
According to new rental decree, landlords are allowed to increased rents by five percent if rents are 11 percent below market rate for specific area rather than 26%. Landlords are asked to consider RERA’s rental index to check out the rent rates in their neighbourhood. A mixed reaction has been observed among landlords and tenants for new rental law. It is the positive sentiment that has been observed among Dubai residents for this new rental decree. They consider it to be better over recent removal of rental cap in Abu Dhabi. It is also expected that rapid rises in rent could drag the market to another bubble. On the other hand, Landlords consider it as positive change, as they get the chance to get better returns after a long break. Since market’s crash in year 2008-2009, tenants have been enjoying lower rents. The new legislation is both in the favour of landlords and tenants.
Role of landlords and tenants to control rises
The successful win of bid to host EXPO 2020, induced huge influx of investors, entrepreneurs in Dubai. A remarkable rise in rental assets is expected for residential and commercial sectors in Dubai and neighboring emirate Abu Dhabi. The market heat intimated DLD and RERA to quickly realign and fine-tune the rental index across private and public sector as well as free zone areas too. Although governmental bodies have played their part to regulate property market in Dubai, what every landlord, tenant and buyer should do is to consider checking online Rental Increase Calculator to know the actual rise in rents their landlords are eligible to make.
2013 has proved itself the year of change and growth for UAE and especially for Dubai. The real estate sector and more specially housing market in Dubai have shown great strides with rises in selling prices and rents. Moreover, investor’s interest to invest and establish business in the emirate also played great role to increase property demand in residential and commercial sectors as well. The magnificent win of EXPO 2020 has developed a positive outlook of business and trade sector in international market and successfully drags foreign investments and entrepreneurs. Almost every sector has been benefited in long run but real estate sector has been benefited earlier. Strong economical conditions predicted that UAE property market will continue to prosper in year 2014.