Rents in Dubai have soared more than 16 percent in the last year, the highest in the world.
That’s compared to rents FALLING in Singapore, London and Hong Kong, according to Knight Frank’s Prime Global Rental Index.
Knight Frank says the soaring cost of rental is a major factor making residents consider buying.
“In Dubai, prime rents continue to outpace wage inflation. This is raising concerns about affordability and is leading domestic and expat buyers alike to consider purchasing a home,” the report said.
“However, the introduction of a mortgage cap and higher transfer fees at the end of 2013 has led some to defer this decision.”
The only place outstripping Dubai is Nairobi at 25.8 percent over the 12 months to mid-March.
But even Nairobi seems to be slowing down more than Dubai, having grown 2.1 percent in the first three months of 2014, compared to Dubai rent growing six percent in Q1.
Ambareen Musa, CEO of Souqalmal.com, said: “We have seen a threefold growth in visits to our home loans section just in the last month.
“Interestingly, transactions have not grown as much and we’ve not seen significant decreases in rates, except from a few local banks. But we have seen a lot more activity from banks promoting their home finance products and coming out with special offers.”
Global rental index (% change)
|3 months (Q1 2014)||12 months (Mar ’13 – Mar ’14)|
Source: Knight Frank’s Prime Global Rental Index
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Rera advice on rent rises
Landlords were allowed to increase rents by a maximum of 20 percent as of 21 December 2013, according to the following guidelines –
- If rent is less than 10 percent below market value, there can be no increase.
- If rent is 11 – 20 percent below market value, the maximum rent increase can be five percent.
- If rent is 21 – 30 percent below market value, the maximum rent increase can be 10 percent.
- If rent is 31 – 40 percent below market value, the maximum rent increase can be 15 percent.
- If rent is more than 40 percent below market value, the maximum rent increase can be 20 percent.
A landlord has to give 90 days notice of any change to the rental agreement or cannot increase the rent or make any other changes.