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Abu Dhabi sees increase in rent despite construction
- August 23, 2006, 8:05 pm
Rents have increased by a massive 50 per cent in Abu Dhabi this year, according to a recent study by Economy Today, the monthly publication of the Abu Dhabi Chamber of Commerce and Industry.
The hike in rents comes despite unprecedented levels of construction in the emirate including the 11,000-unit Showayba City at Mussafah, the completion of several projects at Shahama, and the plans for creating Khalifa Cities A and B.
Recent estimates suggest 36.1 per cent of an average household budget goes toward rent, sparking fears of out inflation rising to 20 per cent, threatening the flow of foreign direct investments to the country.
The Economy Today study reveals that Dh230 billion of developments are expected in Abu Dhabi by 2009.
So far projects totalling Dh75 billion have been unveiled; Emirates Pearl at the cost of Dh35 billion, the Dh25 billion Shams Abu Dhabi, and Al Reem development, which will cost Dh15 billion.
With 70 per cent of the contracts issued by the services department, commonly known as the Khalifa Committee, going to government entities and oil companies, private businesses are preferring to provide their employees with a housing allowance, that ignores the annual rent increases, according to the study.
Fanning the rent-rise flames in the capital
- Dubai rental costs soared by 40 per cent which had a knock-on effect in Abu Dhabi.
- Restrictions to the demolition and construction of commercial buildings in the capital slowing down the construction of new units.
- Oil companies have now started to pay employees’ rent rather than paying them for leave.
- Influx of the incoming labour to participate in the booming economic development of the emirate.
- Excessive interference of brokers and realtors.
- Increasing costs of building materials.
- Absence of a clear outline for the owner/tenant relationship.
Source - Gulf News
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