Removal of rent cap will allow landlords to raise rents

Removal of rent cap will allow landlords to raise rents: Bourdeau

Al Reem Island is Abu Dhabi's most desirable neighbourhood, but staying in the capital is set to get costlier.

According to propertyfinder.ae, a real estate portal, Al Reef, Khalifa City, Al Khalidiya and Al Raha Beach make it to the top five favourite locations on the list, based on data collated by the portal from January to November 2013.

Though the communities popular amongst renters have remained same since beginning of the year, search for apartments in the price range of Dh60,000-Dh80,000 per annum rose in the third quarter following implementation of the regulation that made it mandatory for government staff to reside in the capital from September.

Mid- to low-end properties were mostly available in Mohammed Bin Zayed and Khalifa City where one-beds were leasing for Dh60,000 pa on average.

So will these favourite neighbourhoods see surge in rentals?

Abu Dhabi has already removed its five per cent rent cap last month, which Renan Bourdeau, Managing Director, propertyfinder.ae believes will let homeowners charge higher rents.

"With higher demand for residential units due to the housing decree and higher rents in Dubai closing the gap between the two emirates, Abu Dhabi owners will now be able to charge higher rents.

"However, if this increase is market driven, then there will be neighbourhoods like those around the centre that will see sharper rises, driving residents there to seek more affordable locales. How this plays out, we'll have to wait and watch," Bourdeau said.

Emirates 24|7 revealed earlier that Aldar Properties, the developer of Gate Towers, which houses 3,533 apartments on Shams Abu Dhabi development on Al Reem Island, is currently leasing small one-bedroom apartments for Dh75,000 per annum. Two-beds are available for lease at Dh120,000 pa, while three-beds are offered at Dh160,000 pa.

Rents in the Gate Towers, the design of which is inspired by England's Stonehenge, are almost 20 per cent lower than similar quality apartments in Downtown Dubai.

Asteco Property Management's in its third quarter report said average rents for one-bed units in Central Abu Dhabi stood at Dh85,000 pa, Sadiyat Beach at Dh110,00 pa and Shams were at Dh105,000 pa. In the Shams, average year-on-year rents for one- and two-bed units rose by 10 and 20 per cent respectively.

In the first quarter, propertfinder.ae noticed renters searching for units in the price range of Dh80-100,000, Dh140-160,000 and Dh160-180,000 respectively. In second quarter, the third spot was replaced by the Dh60-80,000 price bracket, which jumped to second place in the third quarter.

Bourdeau adds: "Driving thousands to relocate to the capital, the decree is likely to have increased searches and the demand for budget properties."

The trend was, however, short-lived, as top rental brackets jumped back to Dh80,000-100,000, Dh100,000-120,000 and Dh140,000-160,000 in October and November.