Dubai’s property rent review regulations are to be shaken up. But is it for the better?
Rent reviews are currently linked to a geographically segmented rental price index. Reviews are capped in line with the average for a property’s location.
The Dubai Lands Department is rolling out a new index, said to factor specific building quality and amenities.
At first glance this looks like great news.
Vigilant. Proactive. Data-driven governance. But on reflection, could this be interventionist overkill?
An index comprised of such granular data becomes a mammoth task to maintain, even with the use of modern technology. Very possible that it falls on its own sword over time.
Example: A building’s owner spends millions today, completely upgrading its lift systems. How long until that Capex is reflected in the index? In real time? A month later? A year?
(More detail on how the index will be constructed and updated would help).
A Healthier Alternative?
Could we instead rely on market economics to determine rent reviews. At most, the regulator can set a cap and collar in place to protect against tenant and landlord exploitation.
Wouldn’t that be:
Less labour (and tech) intensive? Less subjective? More efficient?
All Systems Go
At the end of the day, property investment yields are a correlation between price and income. When the former is determined by free market economics, and the latter is controlled, the result is high price volatility.
The precise opposite of what a stable, healthy real estate economy needs.
Is this proposed change vigilance, or overkill?
Share your vote below 👇
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