Property industry insiders have highlighted the possibility of rents increasing by 10 to 20 percent in the coming months following the recent update of the Real Estate Regulatory Authority (Rera) index for Dubai.
The revised Rera calculator, effective from March 1, is expected to impact tenants residing in properties for over two years.
According to Richard Waind, CEO of Betterhomes, the updated calculator aligns future renewals more closely with current market rents, potentially leading to larger rent increases for tenants who have been in their homes for an extended period.
Waind anticipates that this may prompt some tenants to consider moving or downsizing, while others may opt to enter the property market. The segments likely to be most affected are areas that have experienced significant rent hikes in the last two years, especially central villa communities and waterfront apartment communities. Despite the expected short-term increase in rents, industry executives believe that the revision in the calculator could contribute to lowering rents in the long run. The previous calculator created a disparity between renewal prices and open-market rents, leading to stagnation in the market.
Waind suggests that an increase in renewal costs may stimulate the market, potentially increasing the supply of homes in popular villa communities and subsequently bringing down open-market rents.
News Source: Khaleej Times
