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Abu Dhabi to aggresively increase supply in the housing market

One of the biggest problems that have been continually reported on over the last week and a half has been a sharp increase in prices within the property market of Abu Dhabi as well as other places within the United Arab Emirates. While this increase has certainly been beneficial to property investors that locked in their investments in 2007 or even earlier, at the same time the sharp increase in price has resulted in rental increases that have severely affected the finances of many people living within the city.

After the creation of a rental cap and the creation of a rental index, the Abu Dhabi government has apparently decided that enough is enough and they have stepped in with a large bailout to the housing market.

According to both Arabian Business and Emirates Business, the government has allocated 20 billion dirhams towards the housing market. This money will be used in the construction of approximately five thousand new housing units and because of the large amount of money being spent on construction labour it is expected that these dwellings will actually be up and ready to be introduced into the market before the midpoint of the 2008 year.

At the same time as these funds were made available, the Abu Dhabi government also oversaw the creation of Abu Dhabi Commercial Properties, a new property management company that will be responsible for overseeing the creation of these thousands of residential dwellings. The gigantic investment now brings total public spending on the property market to 56 billion dirhams, which is approximately equivalent to $15.2 billion.

Jasim Al Darmaki is the general manager of ADCP and he said that the government was moving in the right direction by creating additional supply to offset some of the effects that the high demand has had. He also promised that ADCP would stay true to the rent cap that was recently put in place by the Abu Dhabi government.

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