Abu Dhabi to pump $5.5bn into housing market

Abu Dhabi has earmarked 20 billion dirhams ($5.44 billion) to boost the emirate’s lagging housing inventory, promising nearly 5,000 residential lodgings within the next few months.

The government has also approved the establishment of a new real estate company, Abu Dhabi Commercial Properties (ADCP), to oversee the surge in funding and manage the massive expansion plans, UAE daily Emirates Business 24/7 reported on Tuesday.

The additional funding, aimed at alleviating the crippling cost increase of housing in the emirate, brings total public spending on housing in the city to 56 billion dirhams, the newspaper said.

Jasim Al Darmaki, general manager of the new company, stressed the importance of addition inventory in reducing cost pressure on the market.

“The ultimate solution is the construction of more commercial and residential buildings and stepping up the construction of on-going projects,” he said.

Al Darmaki added that the ADCP would observe the Executive Council's decision to reduce the rent cap to 5%.

“We will adhere to the new rent cap, not impose additional charges and try to consolidate the good relationship between the landlord and tenant,” Al Damaki told Emirates Business.

Rents and property prices in Abu Dhabi surged 22% and 18% respectively in the second-half of 2007 as demand from expatriate workers and low- and middle-income families outpaced supply, according to HSBC.

Some estimates put the shortage of houses in the emirate as high as 50,000 for 2008, a number the ADCP hopes to eclipse as it strives to deliver 240,000 units into the market by 2012.

The ADCP will come under the control of state-owned Abu Dhabi Commercial Bank (ADCB) and will take over responsibility from the Administration of Commercial Building (ACB), which has been overseeing expatriate housing for the past 25 years.

Under the new structure, ADCP will manage around 55,000 residential units, a tenth of which it has already assumed control over.