Abu Dhabi scraps 5% annual rent cap

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Abu Dhabi has decided to scrap a 5 percent cap on annual rent increases, the emirate's top decision making body said, opening up a property sector where many are paying below current market rents.

The Abu Dhabi Executive Council issued a decision to cancel the extension of the annual 5 percent rent increase rate as of November 10, the official news agency WAM reported late Thursday.

The United Arab Emirates capital slapped a 5 percent cap on annual rent hikes in January 2008 after surging demand drove rents higher and inflation with them.

"Many are paying rents under-the-market rates, so in some cases rents may go up. But with more supply now and competition it is laid more open to market forces," said Matthew Green, head of research at property services firm CB Richard Ellis.

Prime residential rents for new leases in Abu Dhabi were flat in the second quarter of this year after growing 8 percent in the first quarter, whereas secondary residential rents continued to fall, according to property consultants Jones Lang LaSalle.

Demand growth driven by government spending and regulations to reduce commuting from Dubai has been partially offset by continued additions to supply, Jones Lang said.

Last year, Abu Dhabi pressed public sector employees who reside outside the emirate to relocate within its borders, a policy which analysts said aimed to address heavy oversupply in its real estate market.

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Posted by: Saka Cheema

Seems like a Real Estate Chamcha

Posted by: Waqas Cheema

This is a great move and we need this move in Dubai also. Right now the rent cap laws in Dubai means market forces are being opposed and this is very unfair on landlords who have invested millions into Dubai. Tenants who do now want to pay high rents should buy their own home instead of running to RERA to complain

Posted by: jhc

Are you for real? People rent because either they cannot afford to buy, or only plan to stay here for a short time, or don't want to live in the out in the sticks places non emiratis can buy or as epm says don't wish to invest their hard earned income in poorly built over priced rubbish.
Removal of the rent cap in Dubai will only de stabalise the economy, sky rocket the cost of living & result in many people having to leave. Ok so, Dubai will always have a transitionary expat population. However, how many skilled & talented people can it stand to loose?

Posted by: epm

Waqas..Another jilted owner?, who has invested in this merry go round property market. Poorly built and overpriced rubbish.

Posted by: Andrea

Thank you committeee, it means my landlord will increase more than last year's, within the 5% cap he increased more than 15%!!! Abu Dhabi rents are already very high for single person...

Posted by: Roubini

The bubble will burst in February after another and final US shutdown. No scrap will ever help Dubai again. I suggest, sell properties, buy australian dollar. They are only to stay safe after 2015 meltdown!

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