Abu Dhabi City sees 50% drop in annual rent hikes in Q1 2016
Officials and property experts say annual increments in house rents within Abu Dhabi city have fallen 50 per cent since the beginning of this year, according to a report in the Arabic daily newspaper Emarat Al Youm.
They say increasing number of house owners are renewing their leases without rent hikes while some are raising rents by 5 per cent.
This new trend comes after big rent hikes over the past two years ranging between 20 and 25 per cent and up to 50 per cent in old leases.
The newspaper said demand within the city had declined due to difficult in finding car parking space.
It said middle class people now have the option to shift to areas surrounding the city like Mohammed bin Zayed City, Al Reef, Musaffah and Al Reem Island.
Also, more tenants are now demanding fixed rents.
Yahiya Fawaz, a tenant, said his house owner had renewed the lease without rent hike. The rent had been hiked by more than 20 per cent from Dh70,000 to Dh85,000 last year, he said.
Ahmed Malik, another tenant, said his landlord is seeking rent hike by about 5 per cent from Dh90,000 to Dh95,000 when renewing the lease in May. He said he is now looking for a new house as there are house owners who are not raising rents this year. He felt there was no justification for the rent hike.
Mohammed Mustafa, another tenant, said he is unwilling to pay more for his flat in the city’s Tourist Club (Al Nadi Al Sayahi) area. Rent for the house has been hiked from Dh80,000 to Dh85,000. But he said he is willing to renew the lease at the previous year’s rent.
Meanwhile, Fayza Al Zarouni, CEO of Infinite Dimensions Property Advisory, said annual increases in rents in Abu Dhabi saw a decline of more than 50 per cent at the beginning of 2016.
She added the last period had seen renewal of leases without rent hikes after a long time.
She added there are house owners who still refuse to face the truth that the market is changing and that they should not claim hefty rent hikes for renewal of leases, especially as demand has declined.
She explained that a growing number of landlords are now asking for increases of 5 per cent and sometimes up to 10 per cent compared with increases of more than 20 per cent over the past year.
She pointed out that increasing rent by 10 per cent is a big hike, which is unjustified.
Al Zarouni stressed that the real estate market has become more stable which had halted big jumps in rentals, which the market witnessed during the past two years.
Nader Hasan, CEO of Skyline Real Estate Consultants, said falling demand has started to impose itself on the market in Abu Dhabi city.
He said some owners had renewed leases without further increases or accepted annual increase of 5 per cent while a few owners are insisting on increases of more than 5 per cent.
Hassan said the first quarter of this year saw rent hikes of five per cent by landlords for the first time after a long period.
He added that the last period had seen residents vacating their houses if rents are increased by five per cent and looking for alternative accommodation.
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