Is Dubai landlord tenant trouble a battle or a bubble

Published:  21 Dec at 6 PM
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The battle between Dubai expat tenants and their greedy landlords has been hotting up for the last few weeks, but is it being fuelled by an investor-led real estate bubble?

Rent increases in Dubai have reached record levels over the last several months, with expat tenants’ blood boiling as a result. Meanwhile, the strong possibility of the abolition of the 5 per cent rental cap by the government is encouraging new entries in the expat property speculation sector, all of whom will raise rents even more if the cap goes.

In November, Abu Dhabi abolished its rental cap, with higher rents the immediate result. If the Dubai authorities follow suit as expected, rents in the region are expected to explode, causing major problems for expat tenants, many of whom are already reporting landlords’ excesses of greed and the setting of dangerous precendents and practices.

The recent announcement that Dubai had been selected to host the World Expo in 2020 has already caused rents to spike some 30 per cent higher in areas close to the proposed expo site. Expat landlords who’d bought into the buy-to-let market via cheap loans evidently saw the news as a green light for greed.

World Expo 2020 is certain to attract a huge number of visitors, and will create commercial and profit opportunities for the city’s businesses. However, 2020 is, at present, in the distant future, and there’s no justification for swinging rent increases at present.

Furthermore, private sector salaries are not increasing, and company assignment packages are far less generous than in previous years. Supporters of the rental cap abolition believe it would lead to more home purchases rather than rentals, but fail to take into account that expats are not allowed to own property outright and can only lease a home.
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