Business | Property
Abu Dhabi will not step in to curb property prices
The government of Abu Dhabi will not interfere in the property market to curb the increasing prices, except for setting the annual rent increase cap, a senior official said on Monday.
- By Ahmed A. Elewa, Staff Reporter
- Published: 23:31 February 4, 2008
Abu Dhabi: The government of Abu Dhabi will not interfere in the property market to curb the increasing prices, except for setting the annual rent increase cap, a senior official said on Monday.
Since the beginning of 2008 an annual rent cap of 5 per cent has been set in the capital to address the skyrocketing housing costs resulting from a very tight supply compared to an overwhelming demand.
"We do not prefer to interfere in economic activities or interrupt the market mechanisms, yet we have carefully planned the rural development of Abu Dhabi to match the rapid econ-omic growth, which will not take effect immediately, as the balance will be restored gradually when the gap tightens placing the demand slightly ahead of the supply," Falah Al Ahbabi, director-general of the Urban Planning Council of Abu Dhabi told the participants at the Abu Dhabi Economic Forum 2008.
"We do not want excessive demand, nor do we want oversupply, to maintain the value of property, as the growth in real estate sector is resulting from the requirements of economic growth, where more businesses require more human resources, increasing the population and pressuring the supply," he added, explaining that the process of revising the rent cap will take place again in a year's time.
"We will introduce further reductions of the rent cap if needed, as we review the market conditions and act accordingly," he said.
The massive developments taking place in the capital have started already to come into the market, as the case is with some developments for Aldar Properties.
"But to fully restore the balance between the supply and demand will require three to five years," commented Ronald Barrott, Aldar's chief executive officer (CEO).
Nevertheless, the middle and lower income segments of the market still need more attention, according to Khalfan Al Ka'abi, chairman of the construction and development committee at the Abu Dhabi Chamber of Commerce and Industry.
"The Policy Agenda for Abu Dhabi up to the year 2030 is undoubtedly an ingenious effort that reflects the long term vision of the leadership, yet unfortunately today the housing constitutes a 50 per cent stake of the overall inflation rate in Abu Dhabi, and what is needed now is serious action to diminish this effect," Al Ka'abi said, suggesting more attention and support to small and medium size contractors and developers, who can address the different market segments and effectively react to the kind of demand in question.
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