With over 2,500 apartments and 1,000 villas set to be completed this year, many of which will be rented out, Abu Dhabi’s recently established Rental Index will prove useful.
For all of the city’s primary residential areas as well as those in Al Ain, the Abu Dhabi Rental Index establishes transparent benchmark prices.
For example, the Rental Index rates a two-bedroom apartment on Saadiyat Island (SDN1 sector) at Dh138,614 and a two-bedroom option on Reem Island (Sector RR2) at Dh59,476 per year. Now, if the resident is looking for a more cost-effective option, the current rental rates for a two-bed unit in Mohamed Bin Zayed City’s ME10 sector are Dh33,165.
It was this week that the Abu Dhabi Real Estate Centre announced the introduction of the Rental Index. “The prices shown represent the average rental value for the area where the unit is located and are subject to change depending on the property,’
According to sources within the property market, this introduction will primarily affect new rental agreements and price setting, as opposed to renewals. “Abu Dhabi’s got a significant number of handovers coming at locations on Yas, Saadiyat, and Al Maryah,” said a leasing agent. “By setting defined rental rates for property types, the Rental Index should rein in sharp increases in rent demands.”
Various rents have been assigned to each area based on the type of property and the sector within which it is located within a larger area. (You can view it at adrec.gov.ae. According to ADREC, the prices displayed are the average rental value for the neighborhood in which the unit is situated and may vary based on the specific property.)
New leases are subject to the conditions of the market in Abu Dhabi at the time. According to market sources, the rental index does offer precise guidelines regarding what renters should anticipate paying and what landlords can set. “The Abu Dhabi residential rentals remain on an upward trend, with apartment rents increasing by 6.6 percent year-on-year and villas up by 2.4 percent,” said Prathyusha Gurrapu, Head of Research at the consultancy Cushman & Wakefield.
What does the rule state on rent increases for renewals?
As per current regulations, landlords in Abu Dhabi are only allowed to increase contracts by a maximum of 5%.
Under Article 16, ‘The landlord may not increase the rent specified in the contract except once each year by no more than 5 percent. It is permissible, by decision of the Chairman of the Executive Council, to increase, to decrease, or cancel this percentage as deemed appropriate.
“Individuals concerned may resort to the (rental disputes) committee if the landlord has exceeded the defined percentage.”
The committee may also choose to impose a fine of no more than the legal limit and to stop the rate of increase.
Then the landlord’s rent for a full year, should he surpass the predetermined percentage increase. or if it is discovered that the landlord has failed to comply with the Committee’s resolution to address the violation. “The Committee may impose this fine of its own accord even if this is not requested by the stakeholder,” the rule states.
