The Abu Dhabi Department of Municipal Affairs is likely to unveil a provisional rent index by year-end, according to a senior government official.

The DMA, the Department of Economic Development, the UPC and the Abu Dhabi Council for Economic Development are working on compiling the rent index, industry sources told this website.

The emirate removed the five per cent rent cap in November 2013.

In April 2015, MPM Properties, the real estate advisory subsidiary of Abu Dhabi Islamic Bank, said rents have increased on an average of four per cent in the first three months of 2015 and are expected to rise further this year due to drop in new housing supply in the capital.

Only 750 new homes were delivered in the first quarter, the report said, and a total of 5,800 units are expected to be completed this year, which represents the lowest level of new residential supply for five years.

In June 2015, Abu Dhabi announced a law regulating its real estate sector to bring in more transparency and protect the rights of investors.

As per the government directive, the law specifies the jurisdictions of the DMA regarding all real estate issues including preparation of a real estate register to save all data and documents relating to any real estate development, and creation of a project guarantee account, to be opened by the developer for each project in order to protect the rights of buyers in case the units being sold off-plan.

The initiative planned to set rents at about 35 per cent of household income with studio leases starting at Dh25,200 per annum (pa) and three-bedroom units for up to Dh88,200 pa.

In fact, Dubai launched its rent index in 2011, which is updated three times in a year.

It is now mandatory for landlords to adhere to the index when seeking rental increases.

It is understood that the Real Estate Regulatory Agency (Rera), the legal arm of Dubai Land Department, is working on launching a new index