Public sector staff living outside the emirate 'will not be eligible for housing allowance'
Abu Dhabi is pressing its public sector employees who reside outside the emirate to relocate within its borders, a policy which analysts say aims to address heavy oversupply in its real estate market.
"Employees residing outside the emirate will not be eligible for the housing allowance" provided to workers in state institutions, the government said in a circular dated September 12 and seen by Reuters.
The policy takes aim at people, believed to number many thousands, who commute to work in oil-rich Abu Dhabi while living in the neighbouring emirate of Dubai because of lower rents there or a lifestyle which they see as more comfortable.
The new rule, which will take effect after a year, will apply to citizens of the UAE as well as foreigners who are working in Abu Dhabi for the government and all its wholly owned entities and companies, the circular said.
It said employees should live in Abu Dhabi "to avoid traffic and road accidents", an apparent reference to the risks of commuting on the 130km highway through the desert between Abu Dhabi and Dubai, which is packed with cars at rush hour.
However, analysts said the policy appeared designed to help absorb a large supply of new high-end homes that is set to enter the market in Abu Dhabi this year.
Property prices in the emirate have tumbled about 50 percent since the global financial crisis hit the market several years ago, analysts estimate, and the new supply threatens to undermine them further.
"Many new units have come up in Abu Dhabi, reaching the peak of its development cycle. The move is to create new demand and make sure the vacancy rates don't reach high levels," said Matthew Green, research head at consultants C.B. Richard Ellis.
David Dudley, director of operations for the Middle East and North Africa at Jones Lang LaSalle, said: "This is a positive move for Abu Dhabi's property market that will help create demand for housing where there's oversupply."
Analysts were unable to provide a precise number for Abu Dhabi government employees living outside the emirate, but two years ago, the number was roughly 20,000, one analyst estimated.
Government officials in Abu Dhabi were not immediately available to comment on the policy. The government is a major employer in Abu Dhabi and several state-owned companies, such as Etihad Airways, already had such a policy in place or were considering whether to adopt it.
Earlier this year the Abu Dhabi government said it was considering a proposal for a state-backed merger of the emirate's biggest two property developers, Aldar Properties and Sorouh Real Estate, after they were hit hard by falling property prices.
Abu Dhabi, the capital of the UAE, had a population of nearly 2 million in 2010, according to the Abu Dhabi Statistics Centre; most residents were workers from other countries.
This policy was always on the cards, working in and getting paid by Abu Dhabi undoubtedly drives the expectation that an employee should spend a good part of his or her salary in Abu Dhabi.
I guess this will affect the Palm Jumeirah, Dubai Marina, Discovery Gardens, Jumeirah Lake Towers, even perhaps the Greens and parts of Emirates Living and any other developments closer to Jebel Ali. Still at least current Dubai tenants, landlords, real estate brokers etc faced with the impending migration have twelve months to make other arrangements.
To be honest, I was expecting wording that went along the lines, "the move should be effected at the end of any Abu Dhabi government entity employee's lease, should it be in an emirate of the UAE other than Abu Dhabi," having discussed it with a couple of individuals 'familiar with the situation'.
So a degree of latitude exercised, although I thought the number of commuters was 15,000 about 2 years ago, part of whom were Abu Dhabi government?
If the number of people working in government sector in Abu Dhabi and living in Dubai in 2 years ago was 20,000 then today for sure is 30,000 and we shouldn't forget that a similar number of people is there working in private sector in Abu Dhabi and living in Dubai which will make the above figure minimum of 50,000 to 60,000. so within a year we must be seeing the rent in Dubai will drop further since 50,000 people should vacate Dubai and move back to Abu Dhabi. I think its a good move since it will balance the market between Dubai and Abu Dhabi and the investors of Abu Dhabi also can breath ...
Dubai is simply more attractive
Abudhabi government has been very geneours to all its employees (locals and expats) with regards to housing allowances.
The intenion being that these allowances are recycled into housing owned by locals and expats (in few cases ) and back into the Abu dhabi economy.
I think it is reasonable for the govt to ask its employees to show some loyalty to the Emirate and stay in Abudhabi.
There is reasonable housing available in Abudhabi and comparable to Dubai rents (when you factor in fuel costs, car maintenance, stress, accidents, family life etc..)
Work in Abudhabi, play in Abudhabi, live in Abudhabi and enjoy Abudhabi... when u need an adrenaline rush drive to dubai with the credit cards..
What happens if you have bought a property in another Emirate and work in Abu Dhabi? there are many government employees who live in RAK and are UAE nationals will they have to move?
It sounds like a good idea but can you really force people to live in a certain city, surely it's better to make them want to live there by making necessary improvements to attract them to Abu Dhabi.
I'm presently working for an Abu Dhabi Gov't backed organization and they had given us from December 31, 2011 until December 31, 2012 to make the move.
Does the circular that Arabian Business obtained detail specifically the 1-year notice period?
Or does the circular state 1-year as of the date this article is reported?
The problem with this move is that it will certainly have a counter effect...I already know myself and a few employees are prepared to resign.
If so many people are willing to drive 150Km dialy and live in Dubai, that means something went wrong in Adu Dhabi real-estate market.
They need to make living in Abu-Dhabi more attractive instead of such law. For example, there are too many old buildings in Abu-Dhabi city with very old facilities; but the rents are still too high for such crappy flats. There should be a wider range of rents depending on location and flat age to suite all budgets.
Also, Abu Dhabi need to build car parks in the city between residential blocks as buildings are still being built without proper car park. Charging high fees for a car park will not solve the problem if these are not enough to start with.
Fair competition is needed between Dubai and Abu Dhabi.
George - no one's doubting that and so they should. Abu Dhabi has historically had considerably higher rents then in Dubai - still do. But you cannot compare the residential offerings in Abu Dhabi to Dubai. Springs, Emirates Hills, Gardens, Green Community, Jumeirah Lakes, Arabian Ranches, all lovely villa areas with lakes and amenities near by.
What if your kids are enrolled in school within Dubai?
What if your spouse has a job in Dubai? Are they then forced to resign and in my case alternatively have the mother of my kids drive this highway daily instead of me?
What if your spouse has a business in Dubai? Again they will need to commute?
Again another well thought out plan by the Abu Dhabi Gov't. I can see making the rule hard and fast for new joiners to these entities but this rule has gone too far.
The highway excuse is a cop out as well. Been doing it for nearly 3 years now with no loss of life, accident or speeding ticket. Looks like the resignation is in order.
No mama...the policy can only be enforced for public sector.
Didn't UAE signed Human Rights Agreement? The reason for enforcing this law is to the benefit the Government. If the Employer across AbuDhabi, pays just as much accommodation allowances to pay the rental cost + the Utilities that can probably resolve some sort of problem. What about both spouse have different jobs in different UAE state, selection of education that Dubai can offer compared to Abu Dhabi. In many ways, Abu Dhabi has always been expensive with old ruins never to be rebuilt or re-instated. Soon cars will be piled on top each other for the insufficient space or parked miles away & take a taxi to bring you home.
Property are built only for the high end earners, what about the middle & low income people or the families, some are commuting from Ajman to work in Abu Dhabi. Have they consider that?
When a decision is made to pass a rule to all, please consider this, more than 90% of the residence here are all expats. We are obliged to our responsibilities to those we left behind