Blog

Dubai housing headed for correction

House prices in the emirate have climbed more than 22% over the past year

Dubai: Residential house prices in Dubai are increasing at an unsustainable rate and may see correction over the next 12 months, a report by property consultancy Jones Lang LaSalle (JLL) said on Thursday.

House prices in the emirate have climbed more than 22 per cent over the past year – higher than any major global market – as billions of dollars of government real estate projects triggered a buying binge and stock market bull run that has caused concern at the International Monetary Fund.

“The rate of increases seen over the past year is indeed unsustainable…while residential prices and rents will continue to increase over the next 12 months, the rate of increase will decline somewhat,” the JLL report said.

The surge has largely been driven by speculative buying, JLL said, noting: “Such rates of increase cannot be supported by the fundamentals alone.” Data from the Dubai Land Department shows 80 per cent of real estate sales in the first half of 2013 were cash transactions, suggesting the speculative buying that the emirate witnessed in the previous boom period is regaining traction.

Dubai’s property market prices collapsed by over 50 per cent in 2009 after the global economic crisis. The IMF warned in July that overspending could leave Dubai vulnerable to another debt crisis if global market conditions deteriorated.

JLL’s report suggested the current overheating would be tempered by new regulation, significant house supply and developers being less dependent on pre-sales.

Dubai said last week that it would raise the registration fee charged for real estate transactions to four per cent from two per cent to prevent excessive speculation in the property market.

The government is also working on introducing mortgage limits for expatriate and local investors.

About 45,000 new housing units are expected to be delivered in Dubai before the end of 2015, representing an annual increase of around 16,000.

Source: gulfnews

Upscale District One to test market sentiments

Formal sales to happen before year end with villas at between Dh1,800-Dh2,000

Dubai: Dubai’s next big thing by way of a super-premium residential location, the District One in Mohammad Bin Rashid (MBR) City, will have the first formal sales launch of its villas before the year end, according to the developer.

Indicative launch prices could be in the Dh1,800-Dh2,000 range, which in itself would set a new pricing benchmark for upscale locations other than on the Palm and signature developments as the Burj Khalifa.

The developer, Meydan Shoba (an equal joint venture between Meydan Group and Shoba Developers), confirmed that pre-launch bookings are already on for District One, which will be an all-villa project totalling 1,500 residences set over a sprawling 700 acres. There will be multiple sales phases. The entire project, located along Al Khail Road and to cost Dh21 billion, would take between five to eight years to develop and also include a central park, water bodies, hospitality and promenade-fronting retail elements.

“It will be a low-density residential location and as a developer we can confirm that it will remain so,” said Ajay Rajendran, vice-chairman of Shoba Group. “The premium nature will come through not just from the quality of what will be offered but the fact that it will be the only new exclusively villa project being built close to the centre of the city.”

The developer is offering quite a few options on the villa designs, with unit sizes varying from 5,550 to 27,000 square feet. “Between 90-95 per cent of what a buyer would want in terms of design and scale is available through the options we have created internally,” said Rajendran. “On the pricing, we have not included the garage space, decking or open balconies into the offer.”

Cost of development will be met through internal reserves, debt and property sales. Initial construction works have started on site and the first of the major contracts are due to be awarded before the year is out.

On whether there wouldn’t be disruption to future residents in the initial phases from the continuing construction activity at others, the official said: “The development borders three existing and busy arteries and this would reduce any such concern.”

Existing villa values in Dubai have been on an upward trek ever since the market turned itself around and cash buyers began snapping up anything that was instantly available. Value gains of 20 per cent plus from the lows of 2010 are the norm for villas.

Rajendran sees a connect between the ongoing rental gains and demand for property. “As long as rentals are gaining, investors have less reason to worry about asset prices as the momentum is centred around strong fundamentals,” he said. “This is so even if the pace of rental growth slows down.”

Source: gulfnews

 

A progressive step in rental dispute resolution

New dispute centre has work cut out though some provisions need more clarity

His Highness Sheikh Mohammad bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued Decree No. 26/2013 establishing the Rental Disputes Resolution Centre. The Centre aims to provide a specialised judicial framework to deal with rental disputes and to improve the resolution thereof through a simple and expeditious mechanism.

Finding an efficient mechanism to resolve rental disputes in Dubai goes back to the ‘70s when a committee was formed in Dubai Municipality. The logic behind a quasi-judicial committee outside of the Court’s framework was that the market for rentals was governed by norms that required special knowledge that the regular courts may not necessarily possess. In addition, it was thought that delays associated with the court system would damage the real estate market, which could not afford having properties vacant or not generate income pending a court ruling.

The initial jurisdiction of the Rent Committee was confined to evacuation orders, which required swift decisions and actions. The decisions of the Rent Committee enjoyed judicial force and were as such enforced by the courts. There was no recourse to appeal or any sort of opposition as promptness was the main drive for the Committee.

However, its role expanded with time to cover any claim relating to rents and not merely evacuation cases. This meant it had to deal with legal issues that in some cases were complex and beyond the layman expertise of its members.

An added element was that the Committee worked in a vacuum of proper written proceedings and rules, which was a source of confusion for the parties dealing with it. With the real estate boom of the past decade, the number of cases the Committee had to deal with exploded and despite the increase in members and extended working hours, it was simply unable to cope with the volume of cases before it. In addition, the rise in the level of legal complexity led the Committee, composed fully of laymen, to struggle in dealing with these cases in spite of the sincere efforts and good intentions of its members.

So what is new in Decree No 26? The starting point is the jurisdiction is wide enough to capture all disputes relating to rents. However, it excludes rental disputes arising in free zones that have courts or special committees to deal with them (in a reference to the DIFC), those arising out of financial leasing and long leases, which are governed by Law No. 7 of 2006 in respect of Real Estate Registration.

The major development in the Decree is that the Centre is presided by a judge and all committees has a judge as a member in addition to two laymen members. Thus, the formation of the committees preserves the expertise that rent disputes require while adding a legal element that the previous ones lacked. The Centre has four divisions: for Conciliation and Settlement, First Instance, Appeal and Execution.

The other interesting development is that the decisions of the committees are subject to appeal, a process that the previous ones did not have and which attracted a lot of criticism. The appeal committees is an indication that appeals have more legal elements that require consideration. In an attempt to strike a balance between the requirements of justice and the seriousness of appeals, the Decree requires for the admittance of an appeal, the judgment debtor must deposit 50 per cent of the decreed amount with the Centre.

The Decree provides that claims where the value thereof is less than Dh100,000 are final and not subject to appeal except in cases of evacuation, lack of jurisdiction, where the parties were not properly summoned or where forged documents were presented. It is most likely that parties to disputes will lodge appeals based on the many exceptions that the Decree allows which will render in effect the threshold impractical.

The Decree requires that committees render decisions within 30 days of the file being referred to them. However, this period can be extended indefinitely, which is most likely to happen in the majority of cases.

There is no doubt that it is a major development in resolving rental disputes in Dubai. The ultimate extent of success of this mechanism will depend on how efficiently it will be implemented.

— The writer is the chairman of Baker & McKenzie Habib Al Mulla.

Source: gulfnews

Dubai realty still offers a value proposition

Despite a hike in transfer fees values compare favourably with those elsewhere

Last week, news emerged that the Dubai Land Department (DLD) was doubling transfer fees to 4 per cent. However, the rise didn’t come as much of a surprise.

After all, there has been increasing concern that the emirate’s residential market is overheating. Our Global House Price Index shows that Dubai prices rose by nearly 22 per cent year-on-year in the second quarter of 2013.

In recent years, such “cooling” measures have also been introduced in other markets. Indeed, both Singapore and Hong Kong have implemented a number of policies since 2009, albeit with varying degrees of success.

This is reflected in the fact that, in annual terms, in Q2-2013, prices continued to see double-digit rises in Hong Kong, while Singapore saw a relatively modest increase of 4.5 per cent — a sharp slowdown compared to mid-2010 levels.

In Singapore, several rounds of measures have been introduced since 2009. Among these was the Additional Buyer’s Stamp Duty (ABSD), introduced in December 2011; it comprised a 10 per cent levy for foreigners and certain entities. But given that it wasn’t particularly effective, in January 2013, the ABSD was raised to 15 per cent for foreigners.

Moreover, permanent residents, and Singaporean citizens buying their second property, were also brought under the regime. One of the more recent measures — locally dubbed as ‘cooling measure 7.5’ — is the Total Debt Servicing Ratio (TDSR) framework. This requires that the total debt servicing ratio for any property buyer in Singapore must not exceed 60 per cent of their income.

What’s more, since 2009, a number of policies have been implemented in Hong Kong. These include a 15 per cent property tax on foreign buyers, mortgage restrictions and taxes on quick re-sales. Furthermore, earlier this year, the stamp duty was raised from a flat fee of HK$100 (Dh47) to 1.5 per cent for property worth up to HK$2 million. Anything over the HK$2 million saw stamp duty double from 4.25 per cent to 8.5 per cent.

So in context of all these measures, Dubai’s rise in the transfer fee doesn’t look particularly severe. Indeed, all else being equal, we are unconvinced that it will act as a significant brake on residential property demand, and thus price growth. There are several reasons for this.

First, Dubai’s new transfer fee is still much lower than the 15 per cent property tax being imposed on foreigners in the two Asian-Pacific markets, for example. That is important given that about 90 per cent of residential transactions in the emirate are accounted for by foreign buyers.

Second, despite the doubling in the transfer fee, the total costs associated with buying residential property — especially in the prime bracket — remain much lower in Dubai than some other popular locations around the globe.

Third, with prices currently rising at an annual rate of more than 20 per cent in the emirate, the 2 per cent rise in the transfer fee — while a bitter pill to swallow — is unlikely to be much of a deterrent for property investors with a view that Dubai’s residential market has further gains to make.

That said, in the short-term, we wouldn’t rule out a slowdown in the emirate’s residential price growth rate. However, we anticipate that once the market adjusts to the new development, it will likely be business as usual.

All in all, we think that some other “cooling” measures could also have been implemented to achieve the desired effect. For example, any seller transferring a property a short while after the initial purchase could have incurred higher costs.

Moreover, the hike in the transfer fee perhaps should have excluded end-users. And, finally, the Dubai Land Department would have done well to provide the market with a grace period of two to three months on agreed sales to prevent potential disarray among those involved in a transaction process.

Source: gulfnews

New property fees hike could hit mortgage buyers in Dubai

Leaves buyers with an additional payment burden they will need to meet or risk forfeiting deposit

Dubai: Buyers who have just acquired a property in Dubai through mortgage financing could be caught short by the hike in registration fees to 4 per cent from 2 per cent.

“Most of the financed buyers are taking loans on an 85 per cent loan-to-value, which means the balance is from their own cash,” said Chadrakant Whabi, CEO of Acrohouse Properties. “Finance is normally given on net selling price; the additional 2 per cent brokerage fee and 2 per cent transfer charges are paid for by the buyer, which is the normal market practice.” (It is market practice that buyers step up with the additional payments even though the rule is that the registration charges are to be borne equally by the buyer and seller.)

The hike is to come into effect on October 6, according to the Dubai Land Department.

“A sale agreement usually takes between 30 to 45 days to be completed in mortgage financing deals due to lengthy bank formalities that need to be completed,” Whabi said.

AdTech Ad

As things stand now, the buyer puts up the security deposit of 10 per cent while signing the MoU. But, with the hike coming into effect, there is “a risk of this being forfeited if the buyer does not arrange the funds before the agreed transfer date, usually between 30-45 days,” said Whabi.

This could impact agreements signed before the announcement date but where the transfer has not taken place.

“The seller might not pay or share these extra charges as they stick to their net selling price,” said a market source. “Banks are not willing to fund the extra charges as it’s not their policy to fund transfer charges.

Crunch phase

This leaves the finance buyer to arrange for the extra 2 per cent, which is more than 10 per cent of the capital he has saved for his property investment in most cases (if the buyer has taken an 85 per cent loan, he would normally be required to arrange a 15+2+2 per cent payment initially) within days.

This is the crunch phase as everything will depend on the number of days left for the transfer to be effected. Otherwise, the buyer runs the risk of losing his entire security deposit placed on the property.

“While the authorities would have justifiable reasons for increasing the charges, implementing it at such a short notice has created some concerns in the market,” said Whabi. “This could have been avoided if reasonable time was given to buyers and sellers to adjust to the new charges.”

According to Khawar Khan, research manager at Knight Frank, “In recent years, such “cooling” measures have also been introduced in other markets. Indeed, both Singapore and Hong Kong have implemented a number of policies since 2009, albeit with varying degrees of success.

“This is reflected in the fact that, in annual terms, in the second quarter of 2013, prices continued to see double-digit rises in Hong Kong, while Singapore saw a relatively modest increase of 4.5 per cent — a sharp slowdown compared to mid-2010 levels.”

Source: gulfnews

Dubai’s new rent dispute agency eyes fast-track solutions

Will look into both residential and commercial rental disputes with 30-day settlements

Dubai: Dubai’s newly created Rental Dispute Settlement Centre, which will start operations in early December, will adjudicate on both residential and commercial disputes, a top official at the Dubai Land Department has confirmed. More than 200 disputes will be heard — and verdicts delivered — each week by 10 committees, with the stated aim of resolving disputes within an optimum timeframe of 15-30 days.

The current rent dispute body — known as the Judicial Committee — hears about 100 cases a week and a judgement could take up to three months.

Eight of the new committees represent the court of first instance, while the other two committees will oversee any appeals. The Decree issued earlier makes it clear that any judgments of less than Dh100,000 will be binding on both parties in a dispute. As and when the legal team is expanded further, it is possible that the new Centre could take up to 600 disputes a week, officials said.

Before it reaches the first instance level, the parties involved in a dispute can press their contending claims with the ‘Conciliation and Reconciliation’ department.

Top officials at Dubai Land Department, under which the new entity will function, said fast-tracking the resolution of rental disputes required the creation of a new “judicial arm” for the local estate sector, similar to what the Real Estate Regulatory Agency plays on the regulatory side.

As of now, the legal fee — 3.5 per cent of the contractual value — will be similar to what exists at the existing rent dispute agency. However, whether the new entity requires its own fee structure could be decided once the services are launched, said Sultan Butti Bin Mejren, director-general at Dubai Land Department.

The Centre will, however, not take up disputes involving lease-to-buy contractual agreements nor will it cover long-term lease disputes and properties falling within free zones. There will be multiple branches of the Centre located in Dubai apart from the main one in the Dubai Land Department premises.

These moves by the Dubai authorities could be a preemptive move to ensure that rentals across the emirate do not spike too fast in too short a timeframe. In the year to June, rents have gone up by 15 per cent according to the latest market update from Knight Frank.

But anecdotal feedback suggests that in some locations some landlords have been quite arbitrary in their demands, which is where the risks lay for the property sector. If as expected Dubai does win the nomination for Expo 2020, real estate pricing and leasing structures could be in for a sharp further revision.

That the new agency will also cover the office rental marketplace will have come as a major relief for corporate tenants. While the steady supply of new office stock has so far ensured office rentals have not made gains on par with residential rates, it may not be long in coming. More so as the economy is continuing with its upward trajectory and should receive another ballast from a favourable announcement on Expo 2020.

Source: gulfnews

Dubai hikes property transaction charges to 4%

But market seems to have already taken the increase in its stride

Dubai: Effective October 6, freehold property registrations in Dubai will be 4 per cent instead of 2 per cent as the authorities step up efforts to ensure the realty market does not overheat. These will be shared equally by the buyer and seller. (The change will not apply to warehouses or industrial properties.)

In the latest data with the Dubai Land Department, transaction values exceeded Dh160 billion in the year to date from 44,000 deals compared with Dh90 billion for the same period last year. It was Dh145 billion for the whole of 2012.

“The registration fee hike will slow down speculative moves on quick profit taking, which is never a healthy thing in a property market,” said Sultan Butti Bin Mejren of Dubai Land Department. “Last Thursday alone we had registrations of Dh1.2 million and that has never happened in the Department’s 50-year history.

“The decision to hike the registration charges has been in the works for some time and pre-empts warnings expressed by the IMF over the build-up of another property bubble. But Dubai’s property market has attained far more maturity and the buying and selling has been taking place on actual projects.”

AdTech Ad

The official added that even with the hike, property transaction fees here are still lower than in most of the mature Western markets as well as those elsewhere in the region, which averages 6.9 per cent.

“The hike proposal was discussed with multiple stakeholders and including those in the property market and not something that was decided unilaterally by us,” said Al Mejren. “What we have to do is take all steps possible to increase its long-term viability,” said Al Mejren.

That the authorities were considering a hike in registration charges was getting traction in the marketplace for some weeks now. It could also partially explain the marked increase in registration volumes of recent days and weeks.

According to Mahendra Pratap, director at SPF Realty’ “Even with the hike the charges here are still on the lower side compared to other markets and beyond the initial reaction, investors will easily adjust to it. And what could happen is that between now and when the hike gets enforced from October 6, local property values could have seen an upward adjustment by the same margin. The market’s momentum is such.”

Meanwhile, Al Mejren added that the Dubai Land Department will prioritise steps to ensure growth rates are sustainable and that other key fundamentals of the property marketplace, such as the rental index, will be under close scrutiny.

Source: gulfnews

 

Investor interest moves to Dubai’s highways

Projects on and off Mohammad Bin Zayed Road getting on to investor radars

Dubai: Prospective property buyers looking at options in Dubai outside of Downtown or the Dubai Marina belt would do well to take a drive down Mohammad Bin Zayed Road. They will realize that saturated Arabian Ranches is not the sole property investment destination on that side of town.

A resurgent property market has got developers with extensive interests there to ramp up project activity, while more could be on the way. The Falcon City has already built up scale, while the strictly super-premium Al Barari community is adding to its already extensive list of features and new living spaces.

At the same time, the promoter of City of Arabia – IMG – makes a point of emphasizing that the in-the-making destination is not just about dinosaur and superhero theme parks but will have a residential mix as well.

“The project will largely be developed by IMG Group; however, the masterplan does include plots that have been earmarked for high-rise buildings and some of them have been sold to sub-developers as well,” said a spokesperson for the developer. “With the market conditions improving, some of these sub-developers will commence construction work shortly.

“The masterplan is being reviewed based on current market demands. Pursuant to revisions that may be made based on these reviews and related approvals, sales and marketing [of the residences] will commence.”

The flagship Wadi Tower is set for completion by the year end, while development of the cluster’s low-rise element, Wadi Walk, is progressing, according to IMG. (The leisure and entertainment features at City of Arabia, comprising four dedicated zones, will open simultaneously next year.)

Emerging freehold developments and the options they provide could also help dilute investors’ dominant interest in locations such as the Downtown or the high-rise clusters on the stretch leading up to Jebel Ali Free Zone. But it will be a slow build-up of interest for those buyers looking at some home financing support.

“Although finance has started in some, banks are still not that aggressive in financing off-plan projects,” said Jonathan Fothergill at the property firm Cluttons. “However anecdotal evidence suggests that there are sales happening in off-plan projects like Falcon City where there is an already established and running phase one.

“As with the rest of the Dubai market rentals and sales have picked up in Jumeirah Village Circle (JVC). Widening of Hessa Street and completion of internal roads within the development have definitely helped.

“JVC has the advantage of good access from both Al Khail Road and (eventually) Mohammad Bin Zayed Road, and the development is still in its infancy. Apartments in the development are still at affordable levels and would attract both type of buyers [investors and end-users].”

Cluttons estimates a “right price” at the Nakheel-built development as being in the Dh600 to Dh800 a square foot range.

A more “mature” development such as the Arabian Ranches currently has asking prices from Dh1,100 to Dh1,325 a square foot for the townhouses and between Dh1,175 to Dh1,475 a square foot for properties with what might constitute as a sylvan view. (Luxury villas such as the Hattan command its own premium, obviously.)

According to Cluttons, Victory Heights – another mature investment destination – is achieving sales prices of around Dh1,225 to Dh1,500 a square foot, while those in Motor City are “achieving something similar”.

Source: http://gulfnews.com/business/property/uae/investor-interest-moves-to-dubai-s-highways-1.1235262

New law defines tasks and jurisdictions of Dubai Land Department

The department will work on achieving the government’s strategic objectives for the properties sector

Dubai: His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, in his capacity as Ruler of Dubai, on Tuesday issued Law No. 7 of 2013 regarding the objectives, tasks and jurisdictions of the Dubai’s Land Department.

According the provisions of the law, the department will work on achieving the government’s strategic objectives for the properties sector by developing property registration systems that keep abreast with those used on the global stage. It will also be responsible for improving its capabilities in regulatory and real estate control operations, as well as managing and developing the rental sector.

The department’s tasks include encouraging real estate investments by providing a suitable environment for investors, in addition to enhancing the contributions of the real estate sector to the emirate’s comprehensive development.

In addition to the duties assigned to the department in line with current laws, it’s duties will also include drawing up policies and plans that are in line with the development of Dubai’s strategic plan to regulate and develop the properties sector. The department is also tasked with putting in place regulatory laws for escrow accounts, real estate brokers and jointly owned property offices.

The department will encourage investments by providing investors with data and information on available opportunities in Dubai, and will also propose necessary initiatives, market legislations and policies to achieve its goals.

The department’s responsibilities include licensing real estate activities and supervising their operations, in addition to taking necessary measures to protect the stability of the emirate’s real estate market by cooperating with the relevant bodies and authorities. The department will also handle promoting the emirate’s real estate sector locally and abroad by participating in conferences and activities in the local, regional and international stage.

It will look into investors’ applications for requested benefits as per the department’s legislations and policies.

The department will prepare and issue studies and reports on the real estate market, and providing conclusions and results to decision-makers so they can benefit from them during the process of preparing policies and governmental programmes. The department will contribute to spreading awareness and knowledge on the market by preparing training programmes for developers, brokers, and other involved in activities pertaining to the sector. It is also tasked with spreading awareness on the rights commitments of dealers.

The Dubai Land Department will also be responsible for providing consultations to investors, brokers and developers, and introducing projects and programmes that enhance the role of Emiratis in the properties sector and encourages them work in real estate. The department will look into issues concerning the sector, and propose solutions by organising specialised seminars and workshops.

The law stipulates that the department has the right to evaluate the performance of affiliated bodies and ensuring that they are performing the tasks they have been assigned. The department can review the goals and objectives of these bodies, as well as dissolve or merge them as per the necessary requirements.

Article No. 5 of the law stipulates the annulment of the declaration issued on January 245, 1960, regarding the setting up of the Land Registration Department, as well as annulling Law No. 7 of 1997 regarding fees for land registration. It also annuls any article in any other law that contradicts its bylaws. The law comes into effect from the date of its issuance and is to be published in the official gazette.

Source: gulfnews

Investors will rethink before committing to property

But market momentum is such that the rental dispute board will be taken in its stride

Dubai: Dubai’s tenants now have the platform to be heard. The imminent creation of a new rent arbitration centre — Rent Dispute Settlement Centre which will fall under the Dubai Land Department and replace an earlier entity — to settle disputes in 30-45 days ensures that the playing field is balanced between landlords and tenants.

But will this, by extension, also impact developer interests? “If investors are buying property with the intention of leasing out, and they see a market situation where rent disputes go in favour of tenants, they might put a pause on their investment decisions,” said Parvez Khan, CEO of Pacific Township Holdings, a developer with a current portfolio of three residential projects including one at the Downtown.

“Rental yields will always have a major say in influencing buyer decisions. But the current sales momentum in the marketplace should be able to take the rental agency creation in its stride. ”

The new entity will not handle tenancy disputes on lease-to-buy agreements — many developers are using this incentive to get people buying into their projects — or the long-term leases.

Clear understanding

“Given that rentals have gone up drastically in the last 12-18 months there is definitely an increasing chance of disputes,” said Niraj Masand, director at the property services firm Banke.

“Furthermore, with capital values also going up, sellers looking to exit are often not in a position to do so as many buyers are end-users and hence a tenanted apartment or villa doesn’t suit their requirements.”

Developer sources believe the proposed rent dispute agency could skew in favour of tenants. A way out would be for future landlords to precisely state what rental hikes could be in the tenancy contract and the period when it would come into effect.

“This way tenants have a clear understanding of what they are getting into and chances of a dispute arising are reduced,” said Khan. “On the landlords’ part they could offer incentives such as a longer rent-free period or offer a one- to three-year moratorium on rent increases. It is how tenancy contracts are structured in many mature markets and could easily be implemented here.”

Apartment gains

All of the key property fundamentals have been headed upwards in Dubai in recent quarters. Cluttons, the property services firm, reckons average residential values across Dubai as being up 30.6 per cent — led by apartment gains with 34 per cent — in the first six months. Rentals too have been tracking upwards, and market feedback suggests there have been some sharp rise in the asking rates since late August.

And it is not confined to the residential sector alone. Commercial rents too have been treading up, but within certain locations and on select properties. The steady supply of new commercial stock has meant rentals have been range bound.

“The biggest plus from the Rent Dispute agency is the fast-tracking of settlements; where it used to be three months or more on average, we are talking about 30 days and that’s a major advantage for all parties involved,” said Masand.

“It means that tenants who feel they have been hit with sudden hikes are likely to take their chances at the dispute centre. More so, since the new decree makes it clear that any ruling below Dh100,000 on rental claims is binding on both parties.”

Some in the market believe that the new entity could also arbitrate on office rental disagreements. “It could be why that the no-appeals threshold on claims is set at Dh100,000 — it is unlikely that there will be such claims in the residential sector, even within villas,” said an industry source.

Source: gulfnews