Rent cap at 5%

Good news for those currently renting in Abu Dhabi. The government announced yesterday that effective immediately, the rent cap is to be reduced from 7% to 5% for this calendar year.

For those who will be renewing contracts this year, this is indeed good news. However for those seeking new housing the current inflationary pressures will remain.

Due to the influx of expatriate workers at all levels, there has been what could be described as a housing crisis in Abu Dhabi for the past year or so. Many companies who employ people on overseas contracts have traditionally located housing for their employees prior to arrival in the country. However, these days both foreign and local companies have huge problems finding suitable accommodation for their employees, and some of them have started to offer allowances instead of company provided housing.

The problem with this is that not all companies provide cash in lieu, and many of the wealthier international companies who want to woo the best engineers, financiers etc to Abu Dhabi will pay whatever the asking price is for housing. Individuals of course cannot afford this and are consequently priced out of the market. Many individuals and families who can afford it live in hotel apartments for weeks or sometimes months until they find suitable accommodation. Those with families often arrive separately, with one spouse arriving first to 'set up' and the other following later with the children when a house/apartment has been found.

There is light at the end of the tunnel, though it is a while away yet. Properties currently being developed on sites such as Reem Island will be ready in early/mid 2009. These will ease the burden somewhat, and as more units are completed the hope is that the problem will slowly decrease. However, as the number of new residents is increasing weekly, it is likely to take quite a while for the problem to level off.

If you are on the look-out for an apartment or villa, good luck.