Abu Dhabi continues push for middle income housing

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The Abu Dhabi Urban Planning Council (UPC) has said that it will set land aside in the emirate's upcoming developments specifically for the creation of housing for low and middle income demographic groups.

The agency, which was created last year with the specific function of overseeing the expansion and development of the UAE capital's long term urban environments, is also labelled as the 'authority' behind the city's Plan Abu Dhabi 2030 Urban Structure Framework.

According to a report in Abu Dhabi-based newspaper The National, the UPC will set aside the land in one of the new districts being built around Abu Dhabi island, with the most likely spot being in the Capital City area.

This echoes the decision taken in July this year by ZonesCorp, the Higher Corporation for Specialized Economic Zones that is tasked with making the business environment as attractive as possible to foreign investors.

ZonesCorp will create low cost housing for workers, 40% of which will be set aside for families, in order to help reduce rental overheads for companies investing in the city.

As stated in a previous AME Info report, official estimates put the number of workers living in these new cities at 400,000 (30.5% of which will be on low-incomes) by 2010, doubling by the end of 2012 (with 33.75% estimated to be on low-incomes).

Developers target luxury market segment

Despite these initiatives the shortage of housing targeted at middle income groups looks set to continue in the short to medium term as the majority of developments planned for completion over the next five years are aimed exclusively at the luxury market sector.

A report by the Department of Planning and Economy (DPE) confirms that the housing shortage and disparity between the level of supply and demand is one of the principal challenges that the emirate is facing in its bid to accelerate its growth and attract foreign investment and an expatriate workforce.

The Abu Dhabi property market is further being affected by the above inflation increases in the costs of raw materials and commodities indispensable to the building industry. The DPE has found that steel prices soared by 91% in the first half of the year, with cement also seeing increases of over 50%.

Faced with this situation developers have been looking to expand their profit margins by concentrating on luxury developments that promise higher returns.

Some privately-run property companies have also been suffering from the upheaval surrounding the Abu Dhabi Securities Exchange, which has seen foreign investors engage in mass selling activities.

This has come partly as a result of fall-out effects from corruption investigations being undertaken into certain Dubai-based developers and partly from ongoing downward turns on the exchange itself, with the capital's two biggest players, Aldar and Sorouh, both undergoing upheavals on the trading floor in recent weeks.

This need by developers to target higher return investments is the principal reason that government agencies have had to step in to help reposition Abu Dhabi's real estate market going forward.

Indeed, the UPC is set to release guidelines under which developers will have to incorporate units for middle income groups by the end of the year. These will be binding.

See also:
Abu Dhabi property price increases 'certain'
Abu Dhabi property prices to increase until 2012