Abu Dhabi residents rocked by rent spike

Abu Dhabi: Residents in Abu Dhabi are feeling the heat with rents on the upward trajectory in many parts of the city. In Musaffah, a one-bedroom apartment is renting at Dh70,000 and, in Khalidiya, rents for one-bedroom units are in the range of Dh80,000 to Dh120,000.

Other areas too have witnessed a sharp increase in the rents over the last two years after the rent cap was removed in 2013.

The people worst affected are the middle-income groups whose salaries are less than Dh10,000 per month. Many of them are forced to stay on the outskirts of Abu Dhabi, having to endure a lengthy commute to work each day. There are also many who have been forced to send their families back home because they have been unable to afford the rent.

The rents have increased drastically since the Abu Dhabi government scrapped the five per cent rent cap at the end of 2013. Opportunistic landlords have begun hiking rents at will ever since.

In some areas of the capital, rents have doubled and even tripled, real state agents and residents said.

“Finding an affordable accommodation has become difficult in Abu Dhabi. People are feeling the pressure,” said Siddique Madathiparambil, an operations manager of a real estate company in Abu Dhabi

Unlike in Dubai where people have the option to find suitable accommodation in other emirates such as Ajman or Sharjah or move into low-rent clusters like International City, Abu Dhabi residents have no such options, he said.

“Till two years ago, Musaffah was an ideal place for people to stay because of its low rents. But the scenario has changed since the rent cap was removed. Musaffah, too, has become costly. Adding to this problem is the lack of availability of one-bedroom apartments in Abu Dhabi,” said Siddique. “What you have are two-bedroom and three-bedroom units, which are too costly and beyond the reach of average-income earners.”

As a result of this predicament, some people are resorting to staying illegally, either by sharing a villa or a flat, he said.

According to Abu Dhabi Municipality rules, partition of flats is not allowed and villas cannot be shared by more than one family.

Siddique, who rents out flats after taking them on lease from the landlord, said that he is paying Dh2.5 million for a 30-unit apartment building in Musaffah.

“Earlier, it was Dh1.8 million per annum but the landlord has increased the leasing rate after the rent cap was removed. This leaves us with no option but to increase the rent for tenants.”

There is a dearth of affordable residential units in Abu Dhabi, Siddique said.

Abdul Bari, another real estate agent, said, “There should be clusters with low rents for middle-income families. The city should accommodate everyone including the rich and the poor.”

“The rent situation is having a huge impact on the income of families,” said Bari. “Many are contemplating quitting their jobs and leaving the city.”

Though new residential developments like Al Reem Island have come up, they are simply unaffordable for many people, Bari added.

Randeep Menon, who moved to Abu Dhabi from Dubai after landing a good job in the capital, said that he was shocked to see how high the rents were in the capital.

“It was unexpected,” he said. “Rents in Dubai are less compared to Abu Dhabi. There is no affordable accommodation for people to stay here. People come to the UAE to save money but if most of their earnings go towards paying the rent, there is no point staying in the country,” he said.

However, it is not just families who are reeling under the impact of rising rents; even bachelors are feeling the pinch.

Abu Dhabi Municipality has imposed rules barring bachelors from staying in residential neighbourhoods.

A maximum of three people are allowed to share a room as per Abu Dhabi Municipality guidelines.

Bhuvan Chandra, a bachelor living on Electra Street, said finding accommodation for bachelors has become a challenge.

“If the municipality finds more than the stated number of individuals occupying a room or sharing with a family, it asks us to vacate the premises,” said Chandra. “Even landlords are reluctant to rent out a flat to bachelors fearing a reaction from the municipality.

“I was asked to leave the apartment a few years ago where I was staying with a family. There are many such incidents taking place in Abu Dhabi.”

It may be recalled that the Abu Dhabi Municipality last year carried out the ‘Say no to bachelors’ campaign in order to flush them out from residential neighbourhoods.

Over the years, the rent scenario in Abu Dhabi has undergone a big change, said Chandra.

“I am paying three times more rent today than what I used to pay in 2007. Rents have risen drastically. Many men are disinclined to bring their families to the UAE fearing the cost of rents.”

Even basic accommodation units like single rooms come from between Dh3,500 to Dh4,000 per month in many residential apartments in Abu Dhabi city. In areas like Khalidiya or Corniche, they can be even higher.

According to data provided by real estate consultants, a one-bedroom flat in Khalidiya is rented out between Dh80,000 and Dh120,000. In the Corniche area, it can go up to Dh110,000; in Tourist Club area, it is Dh75,000 and, in Musaffah, which mainly caters to the residential needs of low- and middle-income earners, the rent is Dh70,000.

The projection for 2015 is that rents are expected to rise further.