Abu Dhabi rents 'up by 150%'

Rents of new residential units in Abu Dhabi have surged by between 120 and 150 percent since the beginning of the year, according to a survey by UAE daily Emirates Business published on Sunday.

Real estate managers said the hefty hikes in rents have resulted from a shortage of supply set against rising demand, especially from the steady stream of expatriate professionals coming into the UAE capital, the newspaper said.

Also, since it has become more difficult for potential homebuyers to take out loans amid poor global liquidity and subsequent tighter local lending criteria, people who would have ideally bought homes are being forced to rent, applying further pressure on the already stretched rental market.

Otaiba al-Otaiba, chairman of the Abu Dhabi Chamber of Commerce and Industry's property committee, said despite the massive rise in prices, government intervention to cap rents in new housing units was unlikely.

"Owners of the new buildings have spent vast amount of money, and if the government intervened to set a rent ceiling, not only would it cause economic damage to their owners but also won't solve the actual problem - that of shortage," Otaiba was quoted as saying. Otaiba said he did not expect the global financial crisis to have a negative effect on rents in Abu Dhabi, with thousands of expats flocking to the capital and demand for residences and offices likely to remain strong.

He said rents were only likely to ease in three to five years time on completion of new housing projects.