The Abu Dhabi government’s decision last year to do away with the five per cent rent hike cap – which, in some places, resulted in rental hikes – has left many residents struggling to find affordable rent. This is why property experts have urged the government to reinstate rent controls, as The National reported yesterday. They have warned that if rent control is not introduced soon, then a lack of new supply coupled with an increase in demand as the emirate expands economically, could lead to rent increases that price out low-paid workers.
The problem is compounded by the rising cost of living. According to the Cost of Living GCC report published in January, families pay more in the UAE than in any of the Arabian Gulf countries for a British or Indian education, petrol and household utilities.
One solution will be to introduce a new Dubai-style rent index. Abu Dhabi Municipality had planned to divide the city into 10 to 12 zones according to rent levels, setting a rental guide for each zone based on market data analysis.
In other words, it would help keep rents competitive, especially amid concerns about excessive increases. It would also help newcomers to the city to get a clear picture of the rental market. Unfortunately, replicating the Dubai index is proving to be difficult, given the complexities of the capital’s rental market.
So what can be done to create a situation that offers both worthwhile returns for investors, and fair and affordable rents for tenants?
One solution must be to ensure that sufficient mixed-income housing is created. Town planners should insist that new developments include mixed-income accommodation that will cater for the lower end of the scale as well as the middle and upper ends. All will suffer if the low-paid are squeezed out of the city.
