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Dubai: The emirate will soon facilitate lands to develop low-cost housing for Dubai's middle class to tackle the current housing shortage and tame rent-related inflation, a top government official said on Tuesday.
Marwan Bin Galita, chief executive of the newly formed Real Estate Regulatory Agency (Rera), told Gulf News in an interview the agency was all set to finalise a three- to five-year tenancy agreement so that the tenants can tackle the rising rental costs.
"It will be a model tenancy agreement in which all the rights and privileges of the tenants will be reserved. We will ensure that everyone strictly adhere to the contracts," he said.
"The long term contracts will be transparent and fix the rents for that period and help the tenants in coping with rising rental costs."
However, these contracts may not be mandatory, but to help the consumers, he said. "We do not want to police the market, rather allow the market forces to reshape in a more professional manner. We will try to enforce this," he said.
Experts say a big part of the problem is that the demand for housing in the emirate remains significantly larger than what is available in the market.
Project delays have deprived the market of 300,000 housing units, according to Syed Ali Anwar, chief executive officer of 3D Venture Real Estate.
"These projects have been delayed by at least one year and will only be ready by December 2009. Some are facing construction delays because of rising material costs, others never got started after being announced," he said.
"The current demand is for 100,000 apartments but we include the number of people who will be coming to Dubai by 2009, then we will require 200,000 more units."
The continued economic growth means demand for housing units will continue to remain strong, says Bermak Besharaty, chief executive officer of Al Mas Capital, a company advising on real estate finance deals.
"There was some overbuilding in the luxury sector. There was not enough building in the middle and lower income segments. More developers are realising this."
To counter that, Rera is developing a comprehensive Real Estate Index to assess the market and make recommendations to the government on proposed regulations, said Bin Galita.
"We have began collecting data on the housing supplies and projected demand to complete the assessment which should be completed by the end of this year," he said.
Based on data, he said, Rera will make a set of recommendations to the Dubai government in which facilitating the low-cost housing would figure prominently.
"Dubai definitely needs to facilitate low-cost housing to support the middle class like any other cities and we will definitely recommend measures to facilitate this," he said.
"Already, a number of leading developers have come forward to launch low-cost housing schemes that will help tame the demand." Bin Galita also stressed that Dubai was in need for a property arbitration centre, he said.
"Although the number of rent disputes will reduce drastically once the long-term tenancy comes into effect, the time is right for Dubai to set up a property arbitration centre," he added. "The rent committee may not be enough to tackle everything."
With additional inputs from Shakir Hussain and Ashfaq Ahmad/ Staff Reporters
Have your say
How has the rent cap impacted you? Has your landlord complied with the rent cap or flouted it? Tell us at letter2editor@gulfnews.com or fill in the form below to send your comments.
Your comments
Not many landlords follow the rent cap. But another major issue is subletting. Even if a long term tenancy contract comes in place, I doubt if that would really put an end to this crisis. Long term agreement is definitely a good initiative and for it be more effective, I feel there should be some system to monitor and diffuse subletting.
Nasser
Abu Dhai,UAE
Posted: August 22, 2007, 09:58
It is high time for the government of Dubai to finally see and tackle the need for rental control. Middle and low class are the majority that contributes to the development of this country. Hats off to them.
Deqa
Dubai,UAE
Posted: August 22, 2007, 09:47
I am a resident of Abu Dhabi and have been here for less than a year so I have not experienced rental revision yet. Demand for residential units in both Abu Dhabi and Dubai is soaring. There is a plethora of units promised over the next five years but most of them are high-end. Efforts should be made to cater to all levels of demand in both Abu Dhabi and Dubai before this issue becomes more complicated. The first step would be to undertake a study of the nature of demand and then chalking out a plan to meet it.
Hassan
Abu Dhabi,UAE
Posted: August 22, 2007, 09:16
My landlord increased the rent by 20 per cent. I told him about the rent committee?s 7 per cent ceiling. He was not interested in that. Whom am I (an expatriate) to teach a citizen of UAE about the country?s law.
Singh
Abu dhabi,UAE
Posted: August 22, 2007, 09:07
I'm not sure if anyone should really waste anymore time commenting on the rent issue in the Gulf region and it seems to fall on deaf ears, and nothing has changed in the past 5 years except for yet more increase in rents.
Mike
Dubai,UAE
Posted: August 22, 2007, 09:06
This is the only place where rules are blatantly flouted by voracious, insatiable and unscrupulous landlords. Anyway, I am not really bothered since I have already sent my family home five months ago. After all, we are here to save, not to eat, sleep, shop and vegetate.
Deepak
Dubai,UAE
Posted: August 22, 2007, 08:40
It is a wise decision by Rera about 3-5 years agreement. I think it would be more effective if a rule was created as compulsory minimum 3 years agreement with tenant having rights to vacate with a month notice.
Mazhar
Toronto,Canada
Posted: August 22, 2007, 08:25
Frankly speaking, I do not know what's going to happen in the December when my present tenancy contract expires. If the landlord increases the rent again I have no other option but to arrange the excess amount. It is high time that the government intervened as the middle class are finding it difficult to stay afloat, just because of exorbitant rents charged by real estate/landlords. Every year it is increasing just like that. Majority of the people working here belongs to middle class who makes significant contribution to the growth of Dubai.
Alwin
Dubai,UAE
Posted: August 22, 2007, 08:23
I think Rera came up with the ultimate solution for what?s going on in the real estate market! Yes, the government has to step in, by building more units for lower income people, and imposing longer term contracts. All this will have to lower the rents in the future.
Rania
Sharjah,UAE
Posted: August 22, 2007, 08:12
I was having a very good job in Saudi, but like other I did had so many dreams in life therefore I left the job from Saudi and came to Dubai in 2004 and started one computer hardware showroom in Bur Dubai. The first year I paid key money of Dh100,000 and that time the rent was 36,000 and within three years it has gone up to Dh95,000. I could not afford to continue and I left Dubai and went back to Saudi.
Akbar
Jeddah,Saudi Arabia
Posted: August 22, 2007, 03:36
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