Tonight:
5°c
Jumeirah Jane is worried. The Dubai Government has scrapped a rule guaranteeing long-serving expats cheap accommodation in swanky villas and apartments. With school fees soaring and job losses mounting, many of Jane's friends are now throwing in the towel and returning to the Home Counties, where homes are cheap and schools free.
Jumeirah Jane doesn't really exist. But the phrase is common Dubai shorthand for the (mainly British) expat housewives who live in the posh suburb of Jumeirah and its environs. And on Sunday night Sheikh Mohammed, Dubai's ruler, rocked their cosy world with a controversial new decree.
Here's the background. Sheikh Mohammed first introduced a rent cap in early 2006 as an influx of professionals began driving up the cost of accommodation, and with it the rate of inflation. He said no landlord could raise the rent on a villa or apartment by more than 7% a year. That's been rolled over every year since, with minor tweaks.
The cap has been great for those who signed rent contracts in 2005 or earlier. Then, the annual rate for a nice three-bedroom house with a view of the lake was little more than £15,000. In the open market, rents kept soaring. So the family that moved into the identical house next door late last year is paying nearer £50,000.
Sheikh Mohammed's new decree tilts the balance back in favour of landlords. Details are sketchy, but the city's property regulator says it's working on an official rental index: the rent cap won't apply if landlords use the index as a benchmark.
Many economists welcome the move, saying the cap's distortion of the market may have fuelled inflation, by discouraging landlords from renting out empty homes. Jumeirah Jane and John are less enthusiastic. In practice, their rent could double this year — and even when you're paying zero income tax, that hurts.
* The UAE Central Bank has cut its benchmark interest rate to just 1% — bringing it in line with the US Federal Reserve. The UAE pegs its dirham currency to the US dollar, but it had previously resisted tracking the Fed's rate cuts for fear of fuelling inflation. Not any more. The UAE explains that the rate cut is needed now to “support domestic economic activity”.
* State-backed Dubai Aerospace Enterprise has secured a loan of $800 million from banks including Citigroup and Lloyds TSB. The aircraft leasing company did not say how much it is paying. Still, bankers say any sign of credit markets easing is welcome.
