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A CBRE report released last Wednesday confirms what Abu Dhabi residents have been saying for some time now: the Emirates rental market is getting hot, perhaps too hot. In the first three months of this year, residential rents are up 10 per cent, with properties off the island going for 14 per cent higher. Over the last 12 months, rents are up 20 per cent. The scary part isn’t the increases so far but that the increases show no signs of slowing.
While there is likely no going back to the days of a 5 per cent cap, a mitigating force is urgently needed. In that regard, CBRE notes that Abu Dhabi is working towards a new rental index that “would help to balance and protect the interests of all parties by better regulating rental movement.”
While the previous rent cap was likely removed with the purpose of correcting the effects of artificially-depressed prices, the market is now threatening to move in the other direction. If the index isn’t put into place quickly enough, Abu Dhabi risks making itself a financially inhospitable environment for businesses and their employees.