Text size:

  • Small
  • Normal
  • Large

Capital's new rental regulation helps the market

While average rents in Abu Dhabi have fallen since the autumn of 2008, they are still comparable with many of the most expensive cities in the world.

When landlords choose to leave units vacant rather than rent them to tenants in Abu Dhabi, something is amiss in the rental market or in the way it is regulated. While a five per cent cap on yearly rent increases and a tenant's right to renew their lease every year for five years were introduced to benefit renters, they have backfired. As landlords withhold properties for fear that renting them out now will lock them into a rate far below market value in the future, something needs to change. In November, it will. As we reported yesterday, a new law has been introduced to make it easier for landlords to find new tenants for their properties.

While the cap on yearly rent increases will remain, the right for a tenant to renew a lease for up to five years will be revoked. This change has been billed correctly as a victory for landlords but that is not the whole story. In the long term, it should amount to a victory for the market and for all those renting in Abu Dhabi. The old system provided a particular advantage to tenants who moved into their apartments before the property boom. A three-bedroom apartment on the Corniche that rented for Dh50,000 in 2006 would rent for perhaps five times that amount on the open market today. Those living in those units pay a fraction of that amount; they get a great deal but it disadvantages everyone else looking for accommodation. As the old system limited the supply of apartments available for rent each year, this became yet another influence driving prices upwards.

While average rents in Abu Dhabi have fallen since the autumn of 2008, they are still comparable with many of the most expensive cities in the world. The main reason for this is a chronic shortage of supply that no regulatory change can remedy. But there is encouraging news on that front as well. By the time the new rental regulations are applied in November, several thousand new units will be available and these represent just a fraction of what is coming online in the next three years. According to the director of research and advisory services at Landmark Advisory, Jesse Downs, Abu Dhabi will have 25,500 new units by the end of 2011 and nearly 20,000 more by the end of 2012.

Once this supply is added the Government should let the market do its work. It is the temptation of every government to believe that it can manage prices better than the simple law of supply and demand. Those who try to outsmart it do so at their peril.

Back to the top

More articles

Editor's Picks

 The Retreat at the Westin Abu Dhabi Golf Resort & Spa will screen IPL games on request. Lee Hoagland / The National

Top five places to catch an IPL game in the UAE

Enjoy all the 20/20 cricket action at a sports lounge near you – whether in Abu Dhabi, Al Ain or Dubai

No words can describe this April 17, your captions will

Have a catchy caption for this picture. Share it with us and we might publish it and reward you.

 When this 1856 British Guiana One-Cent Magenta stamp goes under the hammer at Sotheby’s in New York on June 17, it is expected to attract a world record bid for a single stamp of up to $20 million (Dh73.4m). Courtesy Sotheby’s

Rare 1856 stamp up for auction at Sotheby’s

This is one of the world’s rarest stamps and when it goes up for auction in June it should fetch $20million. Its history since it was issued in 1856 is fascinating – and includes one murderous chapter, as Jonathan Gornall reports

 An employee plays the game Flappy Bird at a smartphone store in Hanoi. Hoang Dinh Nam / AFP

How Flappy Bird made app developer $50,000 a day

The game propelled the unknown Vietnamese developer Dong Nguyen to rock-star status.

 Iranian President Hassan Rouhani greets supporters after his arrival in Zahedan, the regional capital of Sistan and Baluchestan province on Tuesday, April 15, 2014. During Mr Rouhani's two-day visit, he will tour several other cities and hold meetings with local scholars and entrepreneurs. Maryam Rahmanian for The National

On the road with Hassan Rouhani

Iran's president is touring some of Iran's most underdeveloped provinces. Foreign correspondent Yeganeh Salehi is traveling with him.

 Fans braved long queues and early morning hassles to buy IPL tickets in person rather than buy them online, such has been the enthusiasm for the tournament. Mona Al Marzooqi / The National

Love it, hate it but IPL is too big to be ignored

The tournament steamrolls its way through life perennially from the throes of extinction to the prospect of expansion; alive one moment through its on-field spectacle, dying the next because of another off-field wrangle.


To add your event to The National listings, click here

Get the most from The National