Landlords in the UAE capital will be forced to restrict annual rent increases to five percent until 2012, after the oil-rich emirate extended an existing curb on price increases, Business.com said Thursday. The Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed, said Wednesday the rent rise limit would be extended to Nov 9, 2012, in an effort to stabilize the tenancy market in the city, it said. “The [rental] increase, if any, should be between zero and five percent,” Business.com said quoting from a statement issued by state-run news agency WAM. Abu Dhabi and Dubai introduced price caps in response to the Gulf state's housing boom, in an effort to tackle the escalating crisis of soaring rents. Dubai was the first to roll out curbs in 2005, capping rental hikes at 15 percent. Both emirates currently bar landlords from increasing rents by more than five percent for the duration of the tenant's lease period. As a latecomer to the Gulf real estate boom, Abu Dhabi saw a more modest decline in house prices and rents than neighboring emirate Dubai in the wake of the global financial crisis, thanks to a lack of supply, Busniess.com said. But most Abu Dhabi developers have focused on delivering existing projects after suffering significant losses amid the economic downturn, increasing the release of property to the market. An additional 11,000 homes are scheduled to be handed over before the end of the year, Jones Lang LaSalle said in October, putting fresh pressure on rental rates in the city. “The market is taking a short-term hit for longer-term benefit,” David Dudley, head of JLL's Abu Dhabi office, said in a statement. Oil-rich Abu Dhabi in August announced plans to distribute 2.3 billion dinars (about $626m)to more than 1,400 citizens in the form of housing loans, to build homes or renovate their properties. The UAE said in June it had ringfenced AED7bn from its 2011 budget funds for housing projects and home loans for citizens, and infrastructure spending.
