UAE | Housing & Property

Freehold 'affecting housing charges'

Sophia Friend of Al Maskan Real Estate in Dubai, who has been in the property business for three years, said people cannot afford to live alone anymore opting for house shares to help break down housing costs.

  • By Emmanuelle Landais, Staff Reporte
  • Published: 00:00 October 1, 2006
  • Gulf News

  • Image Credit:
  • "Rents are still increasing tremendously every year. Prices are going up everywhere whether in Deira or the down town area. There isn't one particular area affected." - Sophia Friend, A real estate employee

Dubai: Sophia Friend of Al Maskan Real Estate in Dubai, who has been in the property business for three years, said people cannot afford to live alone anymore opting for house shares to help break down housing costs.

Click here to see the rents in Dubai (pdf)

"Rents are still increasing tremendously every year. Prices are going up everywhere whether in Deira or the down town area. There isn't one particular area affected," said Friend. "The rents are increasing according to the market, and freehold prices are so high now that rental prices are following suit."

Friend said she did not know if another 15 per cent cap on rents would be coming into effect when last year's cap ends later this year. She said increasing freehold property prices is having a knock on effect on residential rental prices.

Buying spree

"Freehold is affecting the residential rental prices, definitely. Landlords are buying more expensive houses and renting them at higher rental prices. I don't think rents will increase more than 15 per cent next year," said Friend.

She said properties were being bought by non-residents who want to make money on their investment by renting the property. "It's like a second income," said Friend. "Even if you are not in the country you have money coming in."

Marcelle Zaher, leasing director from Betterhomes in Dubai, said people were grouping together in house shares to combat high rents. "Our understanding of the law is that the government has capped the rents for tenancy contracts that are being renewed for a further year. Whilst this has been of much assistance to tenants in existing properties this law does not affect a new tenant," said Zaher.

"With or without this law, unfortunately, once a property becomes vacant the general practice amongst landlords is to increase the rent for a new tenant to the current market rates. Of course, as supply starts to meet demand, rates will be more competitive," she said.

"Whatever the ruling will be on the 15 per cent cap next year we are all in the same boat. Landlords are expecting another 15 per cent increase and tenants are ready to pay it," said Zaher. "People are not getting a 15 per cent salary increase to deal with the 15 per cent increase on property."

Shanze Fernandez from Trident Real Estate said subletting was a major cause for high rental prices.

A sublet within a sublet is also one reason prices are going up so much. "Sublets can add an extra 15 per cent increase on rent," she said.

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