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Rent cap to continue in Abu Dhabi |
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The Executive Council of the Emirate of Abu Dhabi has issued a decision to continue to cap the annual increase in the rental value of properties specified in tenancy contracts at five percent as contained in Article 16 of Law No. 20 Year 2006 and its amendments. The Executive Council decided that no annual increase above 5% of the original rental value specified in the tenancy contract will be valid. The decision also extended the deadline to vacate the leased properties, the tenancy period of which have expired, until 9th November 2011. The decision was based on a study prepared by a specialised committee that was formed as per an ordinance by the Chairman of the Executive Council (Ordinance No. 76/ year 2009). The committee included members from various government agencies as well as consulting firms specialising in real estate market. The study had concluded that, despite the increased number of housing units in the emirate’s real estate market recently, this increase was not sufficient to allow market mechanisms to create the necessary balance between the forces of supply and demand. It also pointed out that the bulk of housing units constructed recently have been targeting high income groups while there is still a clear lack in the number of housing units for those with limited income. The decision comes as an option to mitigate the effects of imbalances in the real estate market in the emirate felt since the last few years. The Abu Dhabi government has supported several initiatives to encourage developers to build and supply greater number of residential units in the market, especially targeting those with the limited income.
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