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Big hit to rents expected

22.02.2015
Most analysts agree that a fall in rents is welcome, bringing relief to the rapid growth that occurred in 2013.

Home values surged 56% in the two years through 2013, but it's clear that now, the market is set to undergo a period of falling rents and prices.

The UAE government took steps to introduce measures that would help the market control itself in order to prevent a repeat of the 2008 crash. These regulations are now begin to take effect, coupled with falling oil prices and changes in global currency valuations.

They did the right thing and it had the desired effect because 2013 was pretty ridiculous in terms of price growth,” said Richard Paul, director of U.A.E. residential valuations at Cluttons in Dubai. “Landlords need to lower prices and buyers need to save for deposits. That can easily take 18 months to three years and we may see a subdued market.

Property prices in Dubai's secondary market are expected to soften this year, according to a Standard & Poor's Ratings Services report. However, the consultancy notes that this is a 'cool-down' of the market rather than a crash similar to 2008. The Reidin Housing Market Sentiment Index Survey found similar results, saying it expects a decline in the first quarter of this year.

Now, another factor that is bound to affect the property sector is that buyers from European countries are spending less because their currencies have declined against the dirham. In the past six months, the British pound lost about 8% against the dollar, the euro declined 15% and the Russian ruble slumped 42%.

Experts are cautioning industry players about changes that are bound to occur. It is apparent that the real estate sector is going to see a slow-down in terms of prices and rents. However, most analysts agree that this is welcome, bringing relief to the rapid growth that occurred in 2013. In fact, the falling prices is a good sign, Lenet Asatourian, a broker at ERE Homes, was quoted as saying. "This year, we're getting more inquiries than we did in the past six months and we have an equal number of buyers and sellers... To me, that signals a maturing market.

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Lease process (Rent out)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

Property management

Lease process (Rent)
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.
Real estate search.

Up to 5 days

Real estate search.

Selection of optimal options.

Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Property Selection

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Customer charges:
  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration
Additional services:

Property management

Sales Process
Contract of the lessee and agency.

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership
Ad placement

1 day

Ad placement:
  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.
Signing of the lease agreement

Up to 2 days

Signing of the lease agreement
Expenses of the seller:

None

Additional services:

None

the management process
Contract of the owner and agency

1 hour

Contract of the owner and agency
Rendering of management services

1 year

Rendering of management services
Reporting

1 day

Reporting
Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process
Contract of the tenant and agency.

1 hour

Contract of the tenant and agency.
Selection of optimal investment options

From 3 days

Selection of optimal investment options
Registration of the contract of purchase / sale

1 Week

Registration of the contract of purchase / sale
Expenses of the investor:
  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration
Additional services:

Property management