Key workers leaving over rent rises

Vivienne Swann

• Last Updated: July 20. 2008 12:38AM UAE / July 19. 2008 8:38PM GMT

ABU DHABI // The “backbone” of the capital’s workforce is being crippled by the growing rental crisis, which is affecting not only those living in the city but also new staff that employers are working to attract, recruiters and businesses have warned.

Rents have soared over the past two years and now many middle and low-income earners are struggling to make ends meet.

The crisis is reaching a critical stage, said Christine Bond, the managing director of ABC Recruitment, who has more than 30 years of experience in the Abu Dhabi market.

“I have never experienced anything like this in the recruitment industry,” she said. “Prices are skyrocketing, people are having to move further away from the city, employers are pulling out their hair with frustration because although we can recruit people, they can’t find anywhere to live at a price they can afford.

“The scary part is that we’re losing the backbone of people who do all the work. You can bring as many managers and CEOs in as you like, but without the secretaries, the drivers, nurses, middle-management and average-income earners, who are they going to manage?”

Qualified Indian professionals, for example, have been returning to their own booming economy and, said Ms Bond, employers in the private sector are growing more alarmed.

Last week, she recruited three senior and middle managers for an American company in the capital. The prospective employees came over to check out the housing situation and schools and promptly declined the job offers and went back to the US. It was, said Ms Bond, becoming a familiar story.

“It’s a disaster and there’s no end in sight. Companies elsewhere in the Gulf are looking to recruit well-trained staff, with experience in the region, who can easily adapt – so many of our workforce are leaving. This is particularly true in the oil and gas industry, but all sectors are reporting problems.”

Edna Toner, the managing partner of Aztec Properties, said she had reached the point where she refused to show her clients some of the properties she was offered by landlords.

“I was shown a two-bed property with no windows for which the landlord was asking Dh180,000,” she said. “I visited a studio up five flights of stairs, with no kitchen and no lift, for Dh120,000. These were both a long way out of town. We’re left to tell our clients what they can get for rental allowances that a few years ago were generous. It’s very stressful dealing with people who are upset because even with Dh200,000 a year it can be a struggle to find anything.”

In 2004, a four-bed apartment of 250 square metres in a modern building typically fetched Dh145,000 a year. A good villa might cost Dh160,000 and a more luxurious one from Dh220,000. Until mid-2006, there was a constant supply of spacious one, two and three-bedroom units for between Dh30,000 and Dh50,000.

“During a recent recruitment campaign, we noticed that many candidates wanted to move from Abu Dhabi to other countries in the Gulf region,” said Ms Bond. “Having experienced excessive rent increases and large rises in school fees, these people have decided to look at opportunities elsewhere that have accommodation included as part of the package.” Many companies, particularly in the private sector, had not been able to budget for these increases, she said, so it was inevitable the capital would lose key people.

Mike Greaves, 49, a self-employed professional, agreed there was a danger that people would simply stop coming here to work.

“I’ve lived eight years in a building that’s going to be demolished,” he said. “I pay Dh62,000 a year for a bright, spacious, three-bedroom apartment. We’re being priced out of the market – where will we go?

“A couple of the tenants are saying they’ll have to move to Al Ain or miles outside the city.”

Denise Nowell, a personal assistant to the general manager of an oil company, is also concerned. “I’ve lived here for two years and despite the demolition order, I’m hoping to renew my contract and pay Dh61,793 for the coming year. Where will we go if we are evicted? My company pays my rent, but even if my allowance was tripled, there is nothing available. I’ve been in the Middle East since 1987; this is my home.”

She had expatriate friends with budgets of between Dh220,000 and Dh240,000 who had been living in hotels for the past few months.

Mr Greaves met four construction engineers and project co-ordinators who had lived in hotels but “couldn’t find anywhere decent to live so they’ve packed up and gone home”.

Rent increases are capped in Abu Dhabi and Dubai at five per cent and seven per cent respectively, but the restriction applies only to existing tenants. And some landlords have taken exceptional measures to evict unwanted tenants.

A British expatriate, Nick Pearson, says he and his family were evicted from a villa in Jumeirah Beach, Dubai, when he went on holiday. His landlord sent his sons with a lorry to pack up the family’s belongings while they were in France. After a lengthy legal dispute, he managed to regain control of the villa and his possessions, but says he was left several thousand dirhams out of pocket.

With inflation high and rent increases being fuelled by demand far outstripping supply, there was, said Ms Bond, no obvious short-term solution. “This means that it’s even more important for employers to take good care of their staff, before even more of them start looking for greener pastures.”

* The National