Locked out of realty market

Recent reports suggest that Dubai has $240 billion worth of mega projects are set for completion. — Kt file photo

Cities change. This makes them exciting places to live in. But for the residents of Dubai, the change that’s sweeping over the property market is worrying.

For many, owning a house in Dubai may remain a fantasy. But now, it seems like many may not be able to rent one either. Rents are rising, outrunning modest rises in pay. This is making it difficult to save a deposit. Further, growing sale prices are pushing the size of that deposit further and further out of reach.

The facts are stark. Residential property prices in the emirate have risen by 30 per cent year-on-year as of February this year and are expected to rise further. Although prices for most locations remain shy of their 2008 peaks, some areas have recorded peak levels. Rents have risen 23 per cent year-on-year, with apartments jumping 26 per cent and villas up by 12 per cent year-on-year.

Life in Dubai is becoming very expensive. People are finding themselves unable to afford renting a space that’s close to work and schools and moving to the city fringes. However, even in such areas, namely, Dubai Sports City, International City and Discovery Gardens, prices are rising. In fact, Sports City recorded one of the largest rent hikes in the first quarter of this year, with values rising by 41 per cent.

This is not an issue just for the housing market. High rents choke spending on other goods and services: not promising news for the retail sector. Furthermore, all around, we see developers racing to build more projects; recent reports suggest that Dubai has $240 billion worth of mega projects set for completion underway. Whilst this is great, we need to look beyond building just expensive and ambitious projects. Increasing the supply is not going to increase the number of affordable units. What we need is a good mix of housing stock to cater to all income brackets. The population’s growing, making this even more critical.

So, what are the solutions? I would say three things: rent control, awareness of and adherence to rental laws and the supply of affordable homes. By rent control, I don’t mean a system which prevents any increase in rents, diminishes investment returns and discourages people from becoming landlords. What I mean is a robust system of regulation which prohibits landlords from rising rents and evicting tenants unfairly. While this has been covered by RERA’s recent laws and the introduction of the rental increase calculator, some landlords still manage to get away with it. They cash in on renters’ situation to find an affordable property by evicting them in the pretext of needing apartments for personal use or renovation and instead lease units at a higher price.

Remember that as a tenant, you should be given a 90-day notice period should your landlord wish to increase the rent. Not just this, if your landlord wishes to evict you due to him or his immediate next of kin moving in, then for a period of two years from the eviction date, he cannot re-let the property. Also, he has to give you a 12 month written notice if he wishes to sell the property. If he fails to sell the property, then the 12 month notice becomes void and you will not have to move out.

Having said this, we need to remember one thing. I’ve said it before, but it’s worth another mention. The market is driving the rent, not the landlords themselves. This is why I think that my third point about building affordable homes is key. We need to design mid-income urban housing projects close to facilities and infrastructure such as schools, hospitals and a Metro station.

All said and done, Dubai is where all the action is. With so much to offer, the city will continue to attract the best and brightest people. This is why we need to think about how more effective rent controls and the building of affordable homes can be part of a comprehensive plan to ensure that all Dubai residents can afford a home in our city.

The writer is the deputy CEO of propertyfinder.ae. Views expressed by him are his own and do not reflect the newspaper’s policy.