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Mass relocations up housing demand Haseeb Haider / 31 August 2013 The new rule which has forced tens of thousands of Abu Dhabi government employees to move to the capital, has given the property sector a boost with demand for housing shooting up. The government gave a one-year timeframe to employees and their families to find new homes and schools and move to the emirate. Many believe the move will create more economic opportunities in the capital, and macro-economic stability. There are different estimates on how many people have been affected by the new rule — one estimate suggests about 30,000 were previously commuting daily between Abu Dhabi and other emirates, while David Dudley, the Abu Dhabi-based regional head for property consultancy firm Jones Lang LaSalle (JLL), thinks the figure is more likely between 10,000 and 15,000 people. A separate study by the Department of Transport stated that 19,000 people commute in the morning from Dubai to Abu Dhabi. The CEO at Abu Dhabi economic consultancy Global Minds, Riad Mattar, said the government policy suggested the number must be really big, otherwise the decision would not had been taken. His own estimate was between 15,000 and 20,000 people — mostly executives — would move to the capital. The relocation has already had its impact on rents as in the first quarter of the year when rents shot up by eight per cent, as families started moving back, Mattar said. Abu Dhabi opened up its property sector to foreign investment in 2007, allowing expatriates the right to own properties in the designated investment zone like Al Reem Island, Saadiyat Island and Al Raha Beach and adjoining areas like Al Reef. But, after the financial crisis of 2008, Abu Dhabi residents found rents much lower in Dubai, as thousands of residential units were delivered to their owners much earlier than in Abu Dhabi, where rents plunged significantly. However, due to late arrival of housing units, the rents were not affected in Abu Dhabi. The properties built after the financial crisis, when finally delivered to their owners, created an over–supply situation. Mattar described the government move as a well thought out one. He said first it would improve the occupancy levels in the capital and, secondly, the executive class – the primary people who would be moving back – would spend more money in Abu Dhabi on shopping, groceries and dining out, which will have a multiplier effect on the overall economy. The economist said that many Emiratis would also be affected by the new rule, as an estimated 10,000 or even more had to commute between Abu Dhabi and Al Ain, Dubai and other emirates. According to JLL, 2,000 residential units were delivered in the first quarter of the year in the up-scale localities of Al Bateen Park, Al Reef Community, Saadiyat Beach Residences and Nation Towers on the corniche, bringing the total residential stock to 2,08,000 units. An additional 14,000 units are scheduled to be delivered to the market throughout the rest of the year in the posh area of Eastern Mangroves Promenade by Tourism Development and Investment Company (TDIC), additional units on Saadiyat Island, Al Bustan Complex on 29th Street and several towers on Al Reem Island. The property consultancy says more developments are coming up within planned areas such as Al Reem Island, Saadiyat Island, Danet, Saraya and Rawdhat. Dudley said the rise in the rental values this year was due to the relocations. Ram, an Abu Dhabi property agent, said the recent surge in the demand for housing primarily related to one and two-bedroom housing units, which triggered hikes in their rental prices significantly. The bigger properties and villas with five and six-bedrooms were not in as great demand, as their rental values had dropped, since one family can stay in a villa. With the estimated 14,000 units delivered to their owners, the housing shortage will most probably be addressed over the year, with another 14,000 housing due to come on to the market next year, according to Jones Lang LaSalle. It also estimates that in 2015, about 17,000 residential units are expected to arrive in the capital, which means Abu Dhabi has to maintain its seven per cent per annum economic growth, so that enough jobs opportunities are created and the existing investments into hydrocarbons bear fruit. haseeb@khaleejtimes.com Taylor Scott International
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