There are 261 buildings under construction in various parts of the emirate and the government plans to finance new buildings worth Dh20 billion in the near future. But the population is increasing by at least 150,000 every year placing extra pressure on the property sector.

Dhahi Al Suwaidi, Under-secretary for Finance at the Social Services and Commercial Buildings Department (SSCBD) in Abu Dhabi, also known as Khalifa Committee, said the government of Abu Dhabi was providing funds for property and construction companies to build residential complexes and commercial buildings to help overcome the housing crisis and to meet the demands of the middle class in particular.

He told Khaleej Times that among these projects was financing the Abu Dhabi Commercial Real Estate Company of the Abu Dhabi Commercial Bank for the construction of 261 buildings in various parts of the emirate of Abu Dhabi. In addition, the SSCBD was handing over the buildings under its management to the same company to manage all the buildings which were mortgaged to the government of Abu Dhabi.

He pointed out that the SSCBD handed over 420 properties, buildings and villas to the company until March 4 and was now left with 2,621 properties that would be handed over to the company in accordance with a plan of action to be completed in August.

New commercial buildings

Meanwhile, Jassim Mohammed Sultan Al Darmaky, Managing Director and Director-General of Abu Dhabi Commercial Real Estate Company, said the company was currently managing 5,800 residential units handed over by the SSCBD and added it was planning to run more than 55,000 residential units previously affiliated to the SSCBD by the end of August.

Darmaky said that in addition to the above, the government of Abu Dhabi intended to finance new commercial buildings worth Dh20 billion in the near future. These would be in addition to the previously approved and under implementation project of constructing 261 buildings with 4,970 residential units.

He said the project would bring about more stability to the real estate and tenancy market of Abu Dhabi.

Darmaky also said the bank invited tenders, appointed consultants, followed up execution and construction, received new buildings and then rented residential units through the company, in addition to fully managing the buildings.

He pointed out that the Abu Dhabi Commercial Bank also financed the sums that might be over the amounts approved by the government in order to continue construction of more commercial buildings and provide the needed residential units for the real estate market in Abu Dhabi.

However, he dismissed any significant decrease in rents in the near future owing to the continued economic growth and prosperity in all sectors in Abu Dhabi and increasing job opportunities, which led to a rise in demand for residential units. The increase in the population of Abu Dhabi was around 150,000 per year, which led to a surge in demand for residential units and an unprecedented growth in real estate and construction activity in the emirate.

He said the construction projects being implemented in Abu Dhabi now would limit the continuous increase in rents even if it did not decrease rent fees and provide more housing units.

He commended the decision of the Executive Council for the emirate, which this year restricted the increase in rents in the emirate by not more than 5 per cent. Darmaky stressed that the company was committed to the application of this increase only, under the provisions of Law No. 20 of 2006 on renting premises, and organising relationship between tenants and landlords in the emirate of Abu Dhabi.

He stressed that the law was aimed to bring greater stability to the real estate market in the emirate.    With regard to the solutions put forward to end the current housing crisis, Darmaky said that the ideal solution was to build more commercial buildings and residential units, and to expedite the completion of existing projects.

Counsel Sultan Al Hawsani, Vice-Chairman of the Rent Disputes Committee and Director of Financial and Administrative Affairs in the SSCBD, clarified that the project of constructing 261 buildings would not solve the housing problem, because Abu Dhabi needed to build at least ten similar projects for a limited breakthrough in the crisis.

Corporate role

Hawsani said the solution lied in the expansion of government and corporate role in real estate for the building of hundreds of low-cost housing units for the low-income class people.

Hawsani pointed out that the 261 buildings were distributed throughout the emirate of Abu Dhabi and the values of rents would be based on the location of these buildings and the rents of similar buildings in the locality. He pointed out that low-income people would also have suitable apartments to choose from.

Meanwhile, Counsel Ziad Dabbas, an economic expert with a national bank, said the UAE needed at least a million housing units or apartments to be built annually to find an ideal solution to the problem of rents.

He added depegging of the dirham from the US dollar would enable the import of cheaper construction materials, which would lead to a reduction in the construction costs of buildings. This would help big and small companies to construct buildings at  lower costs and their rents would be suitable for the middle-income people, which would solve the housing problem.

Expatspeak

Khaleej Times sought the opinion of the people in Abu Dhabi regarding the new housing projects and transfer of the management of Khalifa Committee to the real estate company of the ADCB. Most of the people feared that this might further escalate the rents.

Patrick Koola, an IT engineer, said, 'Right now, I am paying Dh42,200 for a single bedroom flat with window air conditioner. I feel that the cost of living will remain the same and will affect the budget of the middle class people. A lot of dust comes into my flat since I live on the first floor. Now I am looking for another flat — finding one is an acid test here.'

Another resident, A. Salam, said, 'I am paying Dh 46,000 for a two-bedroom flat under Khalifa Committee. I don't think that the rent will ever come down.'

Anne Goecke, a homemaker from Germany residing in Abu Dhabi for 11 years, said, 'More buildings are needed. This small number of new buildings under construction will not address the problem of shortage of housing units as well as the increased rents. Right now, I am paying Dh160,000 for a small villa. Because of these high rents, some of us have to return to our countries.'

'I welcome the timely move to construct 261 new buildings in Abu Dhabi by the government. But I doubt whether it is intended for low and middle class people who constitute 75 per cent of Abu Dhabi population and earn less than Dh5,000 per month,' said Abdul Gafoor K.P., senior officer at the Union National Bank in Abu Dhabi.

'The time taken to complete these buildings and the population increase in that period must also be taken into consideration. Since a lot of new projects are coming up, flow of expatriate labour force is still required. But I am sure the wise leadership of Abu Dhabi will, of course, take stock of the situation and give direction to the right path,' Abdul Gafoor added 

'The population of Abu Dhabi city is growing each day and attracting many to come and work here. So, more buildings are needed,' Claudia Rasch from Germany said.

Akhtar Hussain, a bachelor, said, 'I am earning a very good salary but unable to bring my family here due to the high cost of living here. Now, I am giving Dh700 per month for sharing with two persons. I don't see any respite for us.'