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Mon 6 Oct 2008 12:24 AM

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Abu Dhabi housing shortage seen lifting rents, inflation

Estimated 28,000 unit shortfall in housing in the UAE capital unlikely to be resolved soon.

Abu Dhabi housing shortage seen lifting rents, inflation
CHRONIC SHORTAGE: Units under construction cover only one fifth of Abu Dhabis shortfall. (Getty Images)

A shortage of at least 28,000 housing units in Abu Dhabi this year is forcing up rents and helping fuel inflation in UAE's capital, according to a report cited by the state news agency WAM on Sunday.

Current projects being completed will only supply about 20 percent of the needed housing, according to the chamber of commerce report, WAM said.

"The shortage in the housing units on offer has led to more increases in rents which constitute the largest portion of consumer spending and estimated at no less than 40 percent, leading inflation to reach its high levels," the report said.

"The housing crisis is projected to gain momentum as total demand for units will rise to 70,000 by 2010," it added.

A senior official said last month that Abu Dhabi was considering lowering an annual cap on rent increases for properties in the emirate to 3 percent from 5 percent.

Inflation in Abu Dhabi hit 12.9 percent in the second quarter, up from 11.5 percent in the first quarter, according to preliminary data provided by the Abu Dhabi planning department last month. The body later retracted the data and said it was working on a new consumer price index.

Dubai also introduced an annual rent cap of 5 percent this year.

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Sanjay 11 years ago

We have been discussing this issue for quite some time now. We have had several data to support it as well. But the sad part is that no concrete steps have been taken to contain this issue. Rent cap is the only major measure introduced. But that came in a time after the rentals were doubled or even tripled in some cases. Neverthless it was some measure needed though it was late. After this there has been no further decisions to have a consistency in containing the issue and i would rather say that the authorities had prolonged analysis of the various data till date. All buildings under the Social services dept: or popularily known as the Khalifa Committee has been transferred to ADCP, a real estate division of the Abu Dhabi Commercial Bank. It is definitely good to hive-off the business to a private body but with stringent rules and conditions. At a time when the govt: is expected to control, we saw U turn by handing it over to a semi-govt: body to manage this. One measure the govt: should consider this point of time is to allow the transfer of buildings or apartments. At this juncture when a tenant leaves the apartment the prevailing rent becomes history and there is 40% increase on the already hiked rental. If the transfer is allowed then there is no scope for anyone to increase the rental. There may be cases of key-money been demanded but that again can be stopped by having punishment laws. We have had people talking about social imbalance. This is definitely happening as a proper marital relationship is definitely not conducive when the whole family stays together in one room. This force and leads to cheating, unacceptable and immoral activities. The consequences are many and i wouldnt want to discuss that in an explicit manner in this forum. I sincerely hope that the authorities open thier eyes without anymore delay.

Tapan 10 years ago

No doubt Abudhabi is one of the great place to work & live. But it has 2 great short falls. 1st Accomodation shortage & 2nd Good affordable private schools. UAE Govt is spending huge amount of its national resources to develop country in energy, & high tech enterprises. It is fact that such massive developments needs highly talented manpower from all over the world to work in Abudhabi. But the fact is any one relocating to Abudhabi with family needs to think it twice since getting affordable housing & school is a real challenge. I sincerly hope Govt meets these 2 challenges by further controlling on the rental & fees, balancing both buisness & basic needs.