Dubai caps residential rental hikes

04 January 2008
Dubai has tightened control over rental prices, placing a 5 per cent limit on rent increases for 2008. Rents that were increased last year will be frozen at current levels.

It is the third consecutive year that the emirate has used rent caps in an effort to combat inflation.

It will be enforced by the Dubai Land Department, the Real Estate Regulatory Authority and Dubai Municipality's Rent Committee.

With the dirham pegged to the dollar, the emirates have few monetary tools available for tackling inflation. At the same time, massive government investment in development projects and excess liquidity have combined to push up prices.

One of the few options available is price controls. Soaring rentals are widely viewed as a principle cause of inflation. In 2005, rents were estimated to have risen by 40 per cent.

In 2006, Dubai brought in its first rent cap, at 15 per cent. This was reduced to 7 per cent for 2007, in line with Abu Dhabi.

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