Abu Dhabi: A decision by the Abu Dhabi Executive Council to ask public employees to live in the capital could bring in millions of dirhams to the local economy and see rents rise, experts have predicted.
Civil Service sources put the number of employees of local departments, public authorities and government-owned companies that will be affected by the new rule at more than 10,000. The employees under consideration draw between Dh1.5 billion and Dh2 billion in annual housing allowances, which they cannot now claim if they do not reside in Abu Dhabi.
Dr Mohammad Amerah, an Abu Dhabi-based economist, said the decision might not only affect rents but also prices in other related sectors.
“Spending could increase by Dh1.5 billion to Dh2 billion in Abu Dhabi and this will positively affect the economy of the emirate but will also increase prices.”
Paul Maisfield, general manager of the Abu Dhabi office of Asteco Property Management, expects rental prices to increase. “After a year, rental prices could rise based on the number of people who will decide to move to Abu Dhabi,” he said.
Real estate officials estimate that up to 11,000 new units will be completed in the second half of this year, many of them high-end apartment buildings, which will improve options for higher-income residents and increase vacancies in lower-grade assets.
The move received a mixed reaction from people across the capital, with some attacking it a violation of the UAE Constitution’s principle of equality among citizens, while others said it will help reduce traffic jams, increase productivity of workers and ensure a supply-demand balance in the property market.
A researcher in an Abu Dhabi authority, who asked not to be named but lives in Jebel Ali, Dubai and commutes to work daily, says the move will help many landlords bring up their occupancy rates and increase rents at the expense of tenants. “These landlords got many buildings on loans at the time of the real estate boom. Now they are unable to pay back the heavy loan service, so the government forced employees to relocate.”
He added: “How will the government treat employees who live with their relatives in Abu Dhabi, and what about other workers who cannot leave behind sick members of their families?”
The decision, issued on Wednesday and signed by Dr Ahmad Mubarak Al Mazroui, secretary general of the Abu Dhabi Executive Council, obliged public departments and companies to change human resource polices regarding accommodation of Emirati and foreign employees and take all measures to encourage them to live in Abu Dhabi.
The decision states that employees living outside Abu Dhabi for any reason will be deprived of their housing allowances. “Housing allowance may not be availed directly or indirectly by employees who opt to live outside Abu Dhabi for any reason,” the decision says, giving a grace period of a year for employees to adjust their legal status.
“Workers of offices of Abu Dhabi local departments located outside Abu Dhabi, will be exempt from the rule,” the decision says.
According to the Abu Dhabi Department of Transport, as many as 10,869 cars carrying between 16,303 and 19,564 passengers travel to Abu Dhabi between 6am and 9am on a daily basis.