Tuesday, Apr 17, 2007

Gulf News

Dubai: A 20 per cent rent increase notice has taken the management of a university at Dubai Knowledge VillageDubai Knowledge Village by surprise.

"I can't believe the Knowledge VillageKnowledge Village administration served us notice of more than a 20 per cent hike in our annual rent within just one year of our opening the campus here," said a spokesperson for the higher educational institution requesting not to reveal his name but showed proof of the rent increase.

He said that he wrote to the Knowledge VillageKnowledge Village administration that such a hike is in violation of the Dubai rent cap, which prohibits rent increases of more than seven per cent on any residential and commercial property in the emirate.

"But we got a response that the Knowledge VillageKnowledge Village falls in the free zone and the rent cap law does not apply here," he said.

When contacted, Mohammad Al Shaikh, Secretary-General of the Dubai Rent Committee, said that the seven per cent rent cap law applies all over Dubai and free zones are not an exception.

"If any one receives a rent increase notice of more than seven per cent, they should first try to resolve the matter with the management of the free zone concerned and they can also contact the rent committee if they fail to reach an agreement," Al Shaikh clarifies.

No answer

Responding to Gulf News, the management of Knowledge VillageKnowledge Village said that TECOMTECOM Free Zones, including Dubai Knowledge VillageDubai Knowledge Village, boast the lowest rent rate per square foot per year among the free zones in Dubai.

"Since its inception, TECOMTECOM has provided office space within the Free Zones at competitive rates. The rates have been reviewed annually and adjusted according to the market trends," said Salah Al Asmawi, Director of Corporate Communications at TECOMTECOM Investments. However, he did not answer the question of whether the free zones are exempt from the rent cap law and why the management has issued a 20 per cent rent increase notice.

He said, "At TECOMTECOM, we are obligated to allocate cost to maintaining the free zones and as such ensuring the standards that we offer our business partners exceed standards.

"However, we have done so within a reasonable limit and have ensured that our prices remain competitive, as we hope to not only draw new business to our Free Zones, but make every effort to retain our existing business partners."

A number of representatives from various higher educational institutions at Knowledge VillageKnowledge Village told Gulf News that the sharp rent increase would only lead to an increase in the cost of education for students because they would be left with no option but to absorb the cost for rent increase with a fee hike.

Dubai Knowledge VillageDubai Knowledge Village was set up in Dubai to develop the emirate into a destination for education for both regional and international learners.

Currently, there are more than 5,000 students at 13 universities at Knowledge VillageKnowledge Village.

Law: No rate increases for two years in a row

According to the decree on rent caps in Dubai, rent increase shall not exceed seven per cent of the annual rent of the property.

This shall apply to all rent contracts that are to be renewed in 2007 on condition that no rent increase was made on that particular property during 2006.

Article 2 of the decree states that no rent increase shall also be made in 2007 on properties whose contracts had already been signed in 2006 with a new tenant. [No increase on rents in 2007 if the contract was signed for the first time with a new tenant in 2006].

© Gulf News 2007. All rights reserved.

 

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