New Rental Index Due In April; More Accurate Prices Expected

A new index detailing average rents across Dubai will be published in April, a top official said on Wednesday. The current rent index, which has come under criticism for giving an inflated view of rental rates in Dubai, will soon be replaced. “People said that in some areas rent has fallen by 50 per cent while in other areas it has stayed the same,” said Marwan bin Ghalita, CEO of the Real Estate Regulatory Agency. The registration of tenancy contracts on the agency’s Ejari Web site is beginning to give an accurate gauge of rents, he told reporters. If we needed to replace the current rent index, we needed an alternative. Now the Ejari Web site is starting to be used we are getting a better picture. The new rent index should be released by April but it could be sooner, he said.

Industry figures said that the rent index, published in December last year, reflected rent prices at their peak in August 2008. In actuality, rental prices had already begun to decline by December. The effect was that some residents saw their rents hiked to averages that were no longer warranted by market conditions. The Ejari Web site aims to give a picture of rents across Dubai by registering all new and existing tenancy contracts. However, Bin Ghalita denied that registration of existing contracts — based on rents last year would give a distorted account of the current average rents. Existing contracts will be registered, but we will only draw on new contracts to determine the rent index, he said. He did not specify why existing contracts needed to be registered if they were not included in determining averages. Since Ejari was launched in November last year, developers have begun registering contracts.