By Rebecca Bundhun
Survey shows rents soar as demand for new units rises amid extreme supply shortage.
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.
This level of rent increase is unsustainable and damaging to the overall Abu Dhabi (and UAE) economy. There are many expats who have turned down jobs this past year as a result of the shockingly high rental prices in the capital, and increasingly, companies are finding it more and more difficult to offer packages that allow employees to actually just put a roof over their heads. If companies are feeling it on their bottom line, what about the poor folk who have to cough up the majority of their earnings to simply house their families? There's nothing left over to keep the broader economy going!
rent is not going to come down,but then rent is definitely not going to climb next year like what happened this year, that itself is good, because for all the people who are currently working in the capital - we are doomed if we are asked to vacate form the palce where we stay - there is no way that we can adjust the hike in rent which are demanded. well its sad to say that there is less profits in 2009 for business, and less vacancies for job hunters and as a result of that if the rents go down then - then atleast the people who are currently working in the capital will benefit.
May be in a few short years, Dubai will be to Abu Dhabi what Sharjah is to Dubai now, a cheap living option.