Rental allowances loose their fizz

For the past 5 years I have ben very jealous of all my fellow expats who receive a rent allowance from their companies.Working for yourself has many benefits but it would be great to be self employed and have a rent allowance from some benevolent local.

The playing field seems to be levelling this year with many of our existing tenants and propsective tenants all keen to let us know that their companies have reduced their allowances. Those of you who have not experienced expat living will no doubt be thinking that we should be paying our rent from our salaries and should stop whinging and get on with it. Well, a pint over here is 6 quid and any help you can get is gratefully received. Although I dont get an allowance from my miserly business partner I do sympathise, even if it is through gritted teeth, as this is impacting on the market.

A good rent allowance would be in the region of 200 - 300 k AED . Fallen off your chair yet? If you are a landlord I suggest you keep quiet as this is paying off your mortgage and generous expat packages have kept the property market bouyant for many years.
Unfortunately many tenants are claiming that reductions in their allowance is in the region of 25% and this is going to have a negative impact on the rent received over the coming months.This will be compounded by the fact that Tiara is about to be handed over and Marina Residence is not far behind.

Companies are definitely hurting at the moment and the champagne expat lifestyle is currently under threat. With reduced rental allowancea comes reduced bonuses and I see the next twelve months being one of attrition.



My advice is pay your rent as you need a roof over your head, stick to beer ( at 6 quid ) as opposed to the bubbly, and suck up to the human resources manager. People are seeing better rental prices on the Palm and many tenants are starting to consider the Palm as an option. The Palm will attract enough tenants to fill the spaces but there will be a lag and in this period where we will see lower pricing. Rents will come back but don't expect too much in the next 12 months.

My 'green eyed monster' has been tamed for a while but I am sure a year on and expats will be smiling once again as allowances are increased and corks start popping.

Will the Dubai Rent Index mean anything?

RERA launched their Rent Index last year just in an attempt to help stabilise the rental market. With rentals rising rapidly landlords were simply picking a figure and tenants had little choice, so had to accept.
The market started to change in October with the credit crunch biting and landlords expectations were not matching that of the tenant. The Index was immediately out dated and had little relevance in its first 6 months of publication.
On the 15th April 2009 RERA will update the index and in theory there should be an alignment of landlord and tenant expectations.

Yesterday Landmark launched their own unofficial index which is actually a fair reflection on the present situation. Although Landmark have a brokerage department they have always set themselves out to be an advisory company and it will be interesting to note the differences in these two opinions. There is a good a chance that the RERA index will be still be out of date as rents have declined dramatically in the past 3 months and RERA tend to live in bubble.

I think the RERA index will have some relevance but my advice to Landlords and Tenants is to pick an agent who really knows the area in question and so long as you choose to talk to someone who can count to 500 then you should be able to gain a true idea of rental values in Dubai.

I thought of doing our own index for The Palm but I was too scared to offend the Landlords in Tiara who will be less than impressed with present rentals on the Shoreline apartments. However, I have been in Tiara this week and have to say that this development is going to be fantastic . The finish is excellent, the view is amazing and the gardens give you the feel of being in a hotel environment. The shoreline apartment rents will undoubtedly suffer with over 500 Tiara apartments hitting the market in the next 3 months and the rent index will need updating again.