Saturday, May 28, 2005

Rental market :: Khaleej Times

Demand for housing is growing at all income levels. The relative profitability of low income housing may have fallen. One thing is clear, prices are up. One way for renters to deal with higher prices is to move down market. Here are some strategies:

In short, the tenant comes up against a wall, with the hike in rents also ripping rents in the family fabric with many a family head responding with the desperate: sending the wife and kids home, and then opting to live several to a room.

“Dubai is no longer the El Dorado that it once was, though the glitter has only increased over the years. Rents have been going through the roof in Dubai, Sharjah and Abu Dhabi. Taking bed and baggage to Ajman, Ras Al Khaimah, Fujairah and even Umm Al Quwain has only raised rents in those emirates too,” says Azad, a Pakistani employed in a showroom.

Azad shares bedspace in a room in a flat in Al Attar Shopping Mall, Karama. “Eight people to a room that is just 12x10 feet, one atop the other on bunker beds. It is the pits,” says Azad. “We are like cattle in a pen. The landlord is only interested in the rent. Imagine eight people to one toilet. You should see the chaos in the mornings.”

Azad’s ‘landlord’ is also an expatriate who rented the flat from a real estate agency to sublet it to as many as possible.
"Key money" is mentioned in the article; an upfront fee to let or sublet an apartment at a given month rent. While significant upfront fees could be a feature of ordinary rental agreements, they most often occur when there is government intervention like price ceilings holding down rents (or other rules such as prohibiting subletters from charging more rent than is in their contract with the landlord). Other possibilities include property managers taking advantage of absentee property owners.

There is a reference in the article to the Dubai Rent Committee. This suggests the possibility that rents are slow to rise to equilibrium levels due to government intervention.

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