Abu Dhabi has announced to extend the existing curb on price increases, which has compelled the landlords in the emirate to restrict annual rent hikes to less than five percent until 2012.
According to the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed, the rental cap will be extended to 9th November 2012, so as to bring about a stability in the tenancy market.
Rental increases if any, should be in the range zero to five percent, confirmed a statement from WAM, the state-run news agency.
Both Dubai and Abu Dhabi have introduced price caps, following the housing boom in the UAE, to tackle the issue of soaring rentals. Dubai was the first to introduced rental cap during 2005, capping hikes at 15percent.
The current regulation in Dubai and Abu Dhabi does not permit landlords to increase rentals by more than five percent for the entire duration of the tenant’s lease period.
Being a latecomer to Gulf real estate boom, and due to lack of supply, Abu Dhabi witnessed a modest decline in housing prices and rentals, in comparison to its neighbouring Dubai, during the onset of global economic crisis. However, majority of developers in Abu Dhabi have focused on delivering existing projects, which led to increased release of properties into the market.
Another 11,000 fresh homes are due to be delivered prior to the end of this year, the latest Jones Lang LaSalle (JLL) report said in its report last month.
JLL’s Head of Abu Dhabi office, David Dudely, commented “The market is taking a short-term hit for long-term benefits.”
Further, the oil-rich emirate had announced plans to distribute Dh.2.3bn in the form of housing loans to 1400 nationals in the emirate to help them build homes or renovate their properties.
The UAE had earlier said that Dh.7bn has been allocated from its 2011 budget for housing projects and home loans to nationals, apart from spending on infrastructure.