Abu Dhabi govt staff residence rule to have no immediate effect on rents

Abu Dhabi government’s decision to have all employees of local departments and agencies to reside within the emirate will not lead to immediate increase in rents in the capital, while only peripheral communities of Dubai may witness rental decline over the year.

Paula Walshe, Associate Director at Cluttons Abu Dhabi, stated that the move by the Abu Dhabi government to encourage public sector employees to reside in Abu Dhabi is designed to boost the residential market in the capital.

“In the same way that many commercial villa occupiers are taking space in standard commercial buildings to renew trade licences. Both are initiatives to increase the take up of new property stock entering the market this year.”

She added there is no doubt that residential rentals are continuing to fall and the requirement by government workers to relocate to Abu Dhabi will certainly result in more interest in property in certain areas which is good news for agents and developers.

“Realistically though it is unlikely to result in rental price rises until the demand exceeds supply and this is some way off.”

A senior government official, on conditions of anonymity, said: “The real estate market in Dubai will not be affected by the decision… it will have impact on rents, but only in the areas that are close to Abu Dhabi. I believe other residential areas won’t be affected.”

Loshini Lawrence, Operations Manager, Abu Dhabi Office, Better Homes, says: “We certainly welcome this statement, as it would mean more business for the real estate sector, however, we need to be mindful at what cost? Both home seekers and landlords/sellers have their demands. We are already faced with landlords who are not flexible and adaptable to a dynamic market where price and quality of product is key - as the Dubai commuters are usually spoilt for choice in a market where quality of product, lifestyle offerings and price flexibility are easily available or negotiable.”

She adds residents commuting between Abu Dhabi and Dubai are always in search of apartments offering all the facilities, such as swimming pool, gym, landscaped gardens and parks, shopping malls or supermarkets, schools and health care centers in Abu Dhabi.

“In addition to this, over the last two years, we have seen an increase in client requirements specific to what a location or community is offering. We also understand from our clients that it is most convenient to live as close to their place of work as possible; however, if the price, quality and type of property do not meet their requirements, then they are forced to take the risk and do the commute.”

Some families, Lawrence reveals, save up to Dh80,000 to Dh100,000 per annum on their housing costs by living in Dubai.

Real estate experts beleive the most likely communities that may be impacted by the decision will be Discovery Gardens, the Gardens, Jumeirah Lakes Towers, Jumeirah Beach Residence and Dubai Marina.

Earlier on Sunday, WAM reported that the Secretariat General of the Executive Council in Abu Dhabi had issued a decision instructing all employees of local departments and agencies to reside inside the emirate.

The decision, however, grants all the employees one-year grace period to implement the decision.

The move comes within keenness of the Government of Abu Dhabi to ensure safety of its employees and achieve social stability for them and their families. The decision follows in-depth studies on the effects of the distance between place of residence and workplace on employees.

According to official figures released by the Department of Transport in Abu Dhabi, the number of vehicles which enter Abu Dhabi from 6am to 7am, are about 10, 869 carrying between 16, 303 - 19, 564 people. The figures show the traffic congestion encountered by road users.

Last year, ‘Emirates24|7’ reported only a few developers in the capital had announced affordable housing projects, despite the Abu Dhabi Urban Planning Council (UPC) directing at least 20 per cent of new residential property to be set aside for middle-income earners.

“It is indeed the government’s policy, but to date, we have not seen many developers announcing projects that meet this criteria. This gets to the root of the problem with affordable housing – if you speak with the developers they will tell you they just cannot provide housing at the rentals stipulated by the Urban Planning Council and still make an acceptable economic return,” Craig Plumb, Head of Research Mena, Jones Lang LaSalle had said.

In July 2010, UPC had said at least 20 per cent of new residential property in Abu Dhabi needs to be set aside for affordable housing with rents for a studio to start from Dh25,200 per annum.

The council then had said more than 73,000 new homes were scheduled to be built in Abu Dhabi by 2013, which meant that almost 15,000 apartments would be kept aside for middle-income earners.

Following the announcement, Abu Dhabi-based Aldar Properties and Sorouh Real Estate said they are working on affordable housing projects

While in Dubai’s International and Academic City you can lease a studio apartment for Dh19,000 or less a year, no purpose-built studio apartments are available in Abu Dhabi in that price range.

The only option, if commuting from Dubai is to be avoided, is to lease a conversion apartment in a villa for Dh24,000 to Dh36,000 per year.

Moreover, it is now mandatory across the UAE for those seeking to renew their family residential visas to present an attested tenancy contract. Applications are being rejected if the condition is not met.

The regulation is mostly likely to have an impact on residents of Abu Dhabi sharing apartments.

“There are very few areas where you could rent a studio for less than Dh20,000 pa. You would only be able to rent a conversion apartment in a villa,” Drica Rodrigues, Head of Abu Dhabi residential sales and leasing, Cluttons, had told this website.

Rents for conversion apartments range between Dh18,000 and Dh30,000 per year, depending on the location and size.

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