Rules may force cheaper housing

Rents may soon become more affordable as new rules to curb sky high rents in the capital are introduced.

People are leaving Abu Dhabi for jobs that include accommodation as part of the package.

Developers may soon be obliged to provide more affordable housing under new rules to be introduced in response to sky-high rentals that are deterring skilled foreigners from working in Abu Dhabi. With inflation hitting a 20-year high, professionals are slowly turning their backs on the capital and recruiters are finding it harder to fill mid-level jobs.

As a result, the Urban Planning Council (UPC) of Abu Dhabi will announce a set of binding guidelines by October that regulate affordable housing developments, said an official at the agency, who asked not to be named. The Affordable Housing Design Guidelines, as the initiative will be called, is intended to diversify the type of housing that developers are building. "We want to make sure that we will meet the demand of all groups in the near future," the UPC executive said. In order to identify current needs, the council's general manager, Falah al Ahbabi, has been overseeing a study in the past two months. "Depending on the outcome of the study, new policies or design decisions could follow. We may also recommend that a percentage of affordable housing [be built by developers] to offer more diversified unit formats," the UPC executive said.

"New guidelines will be issued in October, and will be binding for developers. They will define the number of units, of bedrooms, the size of the floor space, etc." According to the Abu Dhabi Chamber of Commerce and Industry, there is a shortage of 8,000 homes in the capital, and this figure is expected to rise to 20,000 by the end of the year. At the same time, rents in Abu Dhabi have increased by an average of 49 per cent in the past year, according to a report released by Asteco, the UAE property services company.

"In my mind there is nothing available to rent today for the middle-class in Abu Dhabi," said Susan Cronin, the general manager of Aljar Properties, a city property leasing agent. "The norm is about Dh140,000 (US$38,000) to Dh150,000 for one bedroom. People who have increased the size of their family and have been in their apartment for a long time with a rent cap cannot move out." Purchasing is therefore the only solution to escape rising rents. But until the UPC's guidelines come into effect, people have extremely few options.

According to a Colliers International forecast, most of the 140,000 housing units that are scheduled for delivery between 2011 and 2013 in Abu Dhabi are high-end ­developments. "At the moment, the only developer who is offering what I consider homes for middle incomes is Manazel," Ms Cronin said. The developer has already started construction of Al Reef, near the Abu Dhabi Airport - 2,500 villas and townhouses and about 30 low-rise apartment buildings - and has launched Building Materials City - 17 commercial and residential towers with a hotel and a mall - located on the Abu Dhabi Airport Road. All units are available to non-nationals.

"When we offered at Cityscape approximately 600 apartments in our Building Materials City development, we took over 6,000 names of people who wanted those apartments. There is certainly demand for such units there," said Michael Wilde, the general manager of ­Manazel. Hydra Properties, based in Dubai, is the only other developer that has launched a project for middle-income earners in Abu Dhabi. The development, called Hydra Village, features 2,500 villas located 10 minutes from Maqta bridge.

"A lot of these people who bought there did so to avoid the high rents, with the intention of living in their houses," Ms Cronin said. But two years after the units were sold out off-plan, construction has yet to begin. The masterplan and location has also changed a number of times, according to several brokers. "But even in Al Reef, units have gained so much value that they may no longer serve the lower or middle income [earners]," said Malake Fontaine, a property consultant at Sherwoods. "They started a year-and-a-half ago at less than Dh500 per square foot and today, units are resold at over Dh1,000 [per sq ft]."

The Government has also initiated its own developments, such as projects at Mohammed Bin Zayed City and at Khalifa City B, but these will not be completed for several years and will not be available for sale to expatriates. Some developers have already begun exploring lower cost housing. Aldar, for instance, has hinted that it would launch a villa project for middle-income earners soon. "The Government is keen to promote developers who are trying to serve this middle-income housing demand," said Mr Wilde. "There could be interest from the Government to allocate land, for instance. But before they do that, they want the developers to show their intent, and their ability to provide such projects."

The guidelines would also apply to brokers, the UPC official said, without providing further details. "We are working on a process with the Chamber of Commerce and the Economic department." @Email:[e-mail]