UAE | Housing & Property

Capital's housing crunch grows worse

The housing shortage continues to grow in Abu Dhabi as the surge in development brings in more businesses.

  • By Samir Salama, Associate Editor
  • Published: 23:25 October 5, 2008
  • Gulf News

  • The Abu Dhabi Government will ask real estate developers to allocate 20 per cent of their number of housing units for low-income groups.
  • Image Credit: Gulf News Archive

Abu Dhabi: The housing shortage continues to grow in Abu Dhabi as the surge in development brings in more businesses and workers, it was announced on Sunday.

"The Abu Dhabi housing shortage is expected to grow to 70,000 units by 2010 with buildings under construction satisfying only 20 per cent of the needs this year," said the Centre for Information and Decision making at the Abu Dhabi Chamber of Commerce and Industry, in its latest report.

The UAE capital has 320,000 housing units, which are expected to rise to 328,000 next year and 340,000 by 2010, the report added. "As many as 7,000 new companies have been registered in the emirate."

The Chamber suggested that a clear policy should be drawn to fight inflation and stop any increase in rents until reasonable levels of rents are achieved.

It also recommended building complexes for low income people as the majority of announced projects in the capital are in the luxury high-end market, mostly villas and hotel apartments, leaving the mid-market underserved.

"Abu Dhabi will have to wait till 2013 for the expected delivery of an additional 140,000 residential units to 'cool' the 'overheated' housing market," the report said.

"Supply shortfall is most acute in the middle-income segment while the highest demand is for one- and two-bedroom apartments," Colliers International said.

Colliers added that rents for new leases are expected to continue to rise as the market remains undersupplied. "Rental year-on-year growth average of 22 per cent in 2007-08 is expected to slow with the imposition of the rent cap."

Abu Dhabi plans to slash inflation in the next three to five years by increasing the housing supply and strictly enforcing its rent cap.

UAE inflation soared to 9.3 per cent in 2006, the last official figure, and is predicted to hit a 20-year high of 12 per cent this year due to housing supply shortages and the dirham's peg to the US dollar.

Inflation in the capital was put at 12.9 per cent in the second quarter of this year, compared to 11.5 per cent in the first quarter, according to the Abu Dhabi Economy and Planning Department.

Falah Al Ahbabi, director of Abu Dhabi's Urban Planning Council, said 50 per cent of inflation is caused by a shortage of housing. In an effort to control rents and inflation, Abu Dhabi last month lowered its rent cap from 7 per cent to 5 per cent.

Abu Dhabi Commercial Properties (ADCP), the property division of Abu Dhabi Commercial Bank, is constructing 750 new buildings.

The new buildings -which add up to about Dh2.9 billion ($790 million) worth of development - will mostly be clustered in the Tourist Club area, Mussafah and Al Ain.

Low-income: Quota recommended

The Abu Dhabi Government will ask real estate developers to allocate 20 per cent of their number of housing units for lower income groups.

The recommendations were made in a housing study conducted by the emirate's Department of Planning and Economy.

The study is to be presented to the Abu Dhabi Executive Council for adoption.

According to the executive council's directives, the priority is to curb the housing problem. Hence the lower-middle and lower-income segments will be targeted by Abu Dhabi's plan.

Supply and Demand
Year
Supply
Population
Demand
2005
287
1,668
287
2007
310
2,145
320
2008
320
2,307
335
2010
340
2,610
362
Units in thousands

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