Local Business

New Abu Dhabi rent cap expected

Haseeb Haider/principal Correspondent
Filed on April 22, 2015
New Abu Dhabi rent cap expected

Whilst the timing is still to be confirmed, it is widely expected that a new rental matrix will be introduced in Abu Dhabi to replace the old rental cap system.

New Abu Dhabi rent cap expected (/assets/oldimages/abudhabi2004.jpg)

Abu Dhabi - Housing rents in the capital cooled slightly in the first quarter of the year, sliding to two per cent from three per cent in the fourth quarter of 2014.

Over the past year, average rental growth has been relatively consistent, ranging between two to three per cent for each of the past four quarters. This preceded an initial spike in rentals during the latter part of Q4 2013, immediately after the removal of the rent cap, said property advisory firm CBRE in its report on Abu Dhabi.

Whilst the timing is still to be confirmed, it is widely expected that a new rental matrix will be introduced in Abu Dhabi to replace the old rental cap system, it said.

Following a 12 per cent increase in residential rentals during the past year, many residents in the capital are becoming increasingly concerned over the escalating cost of living, particularly as utility rates are also on the rise, CBRE said.

Overall residential leasing demand has remained strong during the quarter, with the highest demand recorded for two-bedroom units. Rentals within this size bracket average Dh141,000 per housing unit per annum. For prime developments, the range is significantly higher at around Dh150,000-205,000 per annum.

Three bedroom apartments currently average around Dh168,500 per annum, rising over 10 per cent from the same period last year. For prime developments, three-bedroom units range between Dh240,000-285,000 per cent annum. Similar to two-bedroom units, the highest three-bedroom rental rates are also found within the St. Regis Residence.

Aldar has announced the completion of sales for 281 land plots in Al Merief, a residential community dedicated for UAE nationals. The successful absorption of these land parcels underlines the current strong demand from both end-users and developers. Aldar has also reported high interest for its recently completed Burj Mohammed bin Rashid Tower. As of the first quarter of 2015, the high-end residential scheme which offers 474 units is understood to be 90 per cent occupied, despite only being completed and handed over towards the end of 2014, said CBRE.

Rents for two- and three-bedroom apartments currently average at Dh150,000 per annum and Dh245,000 per annum respectively. Over the next four years, around 35,000 new residential units could be completed in the capital. - haseeb@khaleejtimes.com

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