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Abu Dhabi landlords name their price
According to a property law soon to be implemented in the emirate, landlords could become the new arbiters of rental rates.
March 11, 2010 7:20 by kippreport
Abu Dhabi is planning to implement a new property law, according to which landlords can evict tenants at the end of their contract and bring in new occupiers at any rental rate, reports The National. Tenants currently have the right to automatically renew leases for five years, and – thanks to an existing rent cap – landlords can only increase the rent by 5 percent each year.
While the rent cap is set to remain, the new legislation will empower landlords to remove low-paying tenants at the end of their contracts and bring in new ones at a much higher rate. The only requirement is that the landlord has to give two months’ notice for a residential property and three months’ notice for a commercial property, according to the paper.
The new law is expected to be fully operational by November this year, the report says.
Abu Dhabi has been battling an undersupply of housing units in the last few years, and generally rental rates have zoomed upwards. Following the financial crisis, however, and the departure of many residents to neighboring Dubai (with its lower rents), over the last year the capital has seen rates drop between 30 and 35 percent, according to analysts. And according to a recent report by real estate advisory group Investment Boutique, the supply of units in Abu Dhabi is expected to increase by 17 percent between now and 2012.
But just as the supply-demand equation in the emirate seems to be finally reaching a balance, this new law threatens to tilt the market in favor of landlords, who will be able to charge desperate tenants even higher rents.
Will this new law push more tenants over to Dubai? After all, analysts are predicting a further decline in the neighboring emirate’s rental rate. Or will residents stay loyal to Abu Dhabi?