Landlords in the UAE capital will be forced to restrict annual
rent increases to five percent until 2012, after the oil-rich emirate extended an
existing curb on price increases.
The Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed, said
Wednesday the rent rise limit would be extended to Nov 9, 2012, in an effort to
stabilise the tenancy market in the city.
“The [rental] increase, if any, should be between zero and
five percent,” said a statement issued by state-run news agency WAM.
Abu Dhabi and Dubai introduced price caps in response to the
Gulf state’s housing boom, in an effort to tackle the escalating crisis of
soaring rents. Dubai was the first to roll out curbs in 2005, capping rental
hikes at 15 percent.
Both emirates currently bar landlords from increasing rents
by more than five percent for the duration of the tenant’s lease period.
As a latecomer to the Gulf real estate boom, Abu Dhabi saw a
more modest decline in house prices and rents than neighbouring emirate Dubai in
the wake of the global financial crisis, thanks to a lack of supply.
But most Abu Dhabi developers have focused on delivering
existing projects after suffering significant losses amid the economic
downturn, increasing the release of property to the market.
An additional 11,000 homes are scheduled to be handed over
before the end of the year, Jones Lang LaSalle said in October, putting fresh pressure
on rental rates in the city.
“The market is taking a short-term hit for longer-term
benefit,” David Dudley, head of JLL’s Abu Dhabi office, said in a statement.
Oil-rich Abu Dhabi in August announced plans to distribute AED2.3bn (about $626m) to more than 1,400
citizens in the form of housing loans, to build homes or renovate their
properties.
The UAE said in June it had ringfenced AED7bn from its 2011
budget funds for housing projects and home loans for citizens, and
infrastructure spending.
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