Abu Dhabi: Rents in the capital will soon be guided by an index providing information about the true rental value of properties, a senior municipal official said in the capital on Wednesday.
The index will determine the rental value of a unit based on indicators like location, number of bedrooms and how old it is, Ali Al Hashemi, manager of Tawtheeq at the Municipality of Abu Dhabi City, told Gulf News.
"This index will be in place within the next two years, and it is one of the future plans for the municipality's Tawtheeq system that aims to streamline leasable unit transactions in the city," Al Hashimi said.
From November, the Tawtheeq system will be implemented for transactions associated with the Department of Transport (DoT), the Abu Dhabi Distribution Company (ADDC) and the Department of Economic Development.
"In this first phase, a Tawtheeq-registered tenancy contract will be required for all transactions related to rental units leased out by property management companies. These transactions include getting a parking spot near one's residence from the DoT, or opening up a new account for water and electricity distribution with the ADDC," Al Hashimi said.
The requirement will be extended to units leased by private landlords and property owners as well by February, he added.
"Although tenants will eventually require Tawtheeq-registered contracts for transactions with at least 16 different entities, the responsibility to register units on to the system, as well as the cost, is entirely up to the property management company or the landlord. Tenants must therefore approach their landlords if their contracts are not registered," the official added.
Nearly 45,000 leasable units have already been registered under the system since its introduction in March, including those owned by Abu Dhabi Commercial Properties Company, First Gulf Properties, Deyaar Development and Abu Dhabi National Property Company.
"While nearly 80 per cent of property management companies have registered by now, only about 10 per cent of private landlords have responded," Al Hashimi said. He urged leasable property owners to ensure conformity with the system soon.
Promoting transparency
David Dudley, regional director of international real estate services company Jones Lang LaSelle and head of its Abu Dhabi office, said the rental index would promote market transparency.
"Currently, a two-tier market exists in the Abu Dhabi housing market. People who rented units before the 2007-2008 peak are paying low rents due to the 5 per cent annual rent cap, while those who came in afterwards are paying much higher sums and constantly negotiating with their landlords to have these reduced," Dudley explained.
"While a rental index will not eliminate this, it will still create much greater transparency, especially if it is constructed with accurate information about the market," he said.
