Rents in the UAE's capital soared 17 per cent in the first quarter, compared to the year-earlier period, the official news agency Wam reported on Saturday, citing a Department of Planning and Economy report.
Surging rent is attributed to the shortage of residential units as a result of landlords' preference for renting out space for commercial rather than residential use, the report said.
"As rent of three-bedroom residential units is too expensive to afford, landlords of these units opt to rent them out as commercial units," it said.
Rent and rent-related expenditures comprise 45 per cent of total expenditures of a consumer in the emirate, with low- and middle-income people spending 50 per cent of their salary on accommodation, Wam reported citing recent studies by the department.
Inflation in the UAE, the second-largest Arab economy, hit 9.3 per cent in 2006, its highest level since at least 1987, and probably accelerated to 10.9 per cent last year, according to an estimate by the National Bank of Abu Dhabi.
Rising rents were the main driver of price rises, UAE central Bank Governor Sultan Nasser al-Suweidi said last year.
The department is seeking to develop accurate methodology to measure all indicators related to prices as a step towards taking measures to curb inflation, Wam reported. (Reuters)