In a recent development, Dubai’s Real Estate Regulatory Authority (Rera) has revised its calculator on March 1, potentially leading to significant changes in the rental landscape. Industry insiders speculate that residents, particularly those who have been residing in their properties for over two years, may experience rent increases ranging from 10 to 20 percent in the near future.
The updated Rera calculator aims to align future renewals more closely with the current market rates, acting as a benchmark for landlords and tenants to determine permissible rent adjustments. This adjustment is anticipated to have a more pronounced effect on long-term tenants, who might now face larger rent hikes upon renewal compared to the previous calculation method.
Experts believe that certain areas, particularly central villa communities and waterfront apartment communities, are likely to witness the most substantial impact. The segments that have experienced the highest rent surges in the last two years are expected to bear the brunt of these revisions.
Some industry executives foresee a potential shift in tenant behavior as a response to the impending rent increases. Some tenants may opt to relocate or downsize, seeking more affordable housing alternatives. On the other hand, this situation might prompt others to consider property ownership as a viable long-term solution.
Despite short-term concerns regarding rental hikes, there is optimism that the Rera calculator’s revision could contribute to a healthier real estate market in the long run. The previous calculator had created a significant gap between renewal prices and the open market, resulting in limited market movement and a shortage of available properties, especially in sought-after villa communities. The expected increase in renewal costs could stimulate market activity, potentially leading to an increased supply of homes in these communities and a subsequent moderation in open market rents.
As the real estate landscape in Dubai undergoes these adjustments, it remains to be seen how tenants, landlords, and the market, in general, will adapt to these changes. The revisions in the Rera calculator have the potential to shape the future dynamics of the Dubai real estate market, possibly fostering a more balanced and responsive environment over time.
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