Experts in the booming capital’s real estate market expect the annual rate of increase of rents to be reduced to three per cent or four per cent a year from the current seven per cent.
Most felt it would be difficult to totally do away with the limit on the annual increase due to the growing numbers of expatriates moving to the capital to work, especially after the sector’s loss of many residential units that were converted into serviced or hotel apartments.
However, an official at the Abu Dhabi tourism sector, who requested anonymity, denied that the conversion of residential apartments into hotel apartments – a process he claimed stopped about six months ago – had a connection to the present shortfall in residential units or with the rent crisis.
The official said converting buildings into hotel apartments was an attempt to meet the urgent need for hotel units in Abu Dhabi, adding that the process was subject to strict conditions, including receiving the Tenancy Dispute Settlement Committee’s approval, which meant there was no problem between the landlords and tenants.
The units undergoing conversion also needed to conform to the standards of the hotel sector, he said.
The official said before the conversion process was stopped, only five residential units had been transformed into hotel apartments, including two new buildings that had never been occupied before and three buildings that had the Tenancy Dispute Settlement’s approval for the conversion.
People in the capital’s property sector also expected the emergence of a new package of real estate legislation regulating all dealings in Abu Dhabi’s real estate sector. The first of these is expected to be the modification of the annual rate of increase in rents.
Also expected in the legislation is the raising of the minimum age at which a building can be demolished from 15 to 20 years.
Property experts: Abu Dhabi rent cap reduction possible