ABU DHABI // The agency that oversees Abu Dhabi's long-term development has announced a two-pronged plan to dramatically boost the amount of affordable housing in the capital. The Urban Planning Council (UPC) will allocate land, most likely in the planned Capital district between Musaffah and Khalifa City, to developers to build new housing for low- and mid-income families. It will also work with developers to increase the amount of affordable housing in projects already underway, including in the special investment zones where expatriates are eligible to purchase property.
"We are working with developers willing to build affordable housing and we will help them," said Falah Mohamed al Ahbabi, the council's general manager. Skyrocketing rents and property prices have emerged as one of the emirate's biggest obstacles to its plans to grow the population and diversify the economy. Skilled expatriates are slowly turning their backs on the capital, while recruiting agencies are finding it harder to fill mid-level jobs. The workers are crucial for staffing an array of jobs ranging from office workers and school teachers to airport and construction workers.
Few housing options exist for these workers, as rents have increased by an average of 49 per cent in the last year, according to a report by property services company Asteco. "In my mind there is nothing available to rent today for the middle class in Abu Dhabi," said Susan Cronin, general manager of Abu Dhabi-based property agent Aljar Properties. Yet, according to a report by Colliers International, a property consultant, most of the 140,000 housing units due to be completed between 2011 and 2013 are luxury developments. A study commissioned last year by Al Rayan, a real estate developer focusing on building lower-cost homes, found that 350,000 people in the emirate on low- or middle-range incomes needed more affordable housing.
Land prices in Abu Dhabi have increased so fast - from Dh250 (US$68) to Dh600 per square foot in just over a year - that building affordable housing at has become very difficult, developers say. "Developers can no longer build houses for mid-income families in Abu Dhabi," said Sulaiman al Fahim, the chief executive of Dubai-based developer Hydra Properties. "Only government-supported companies like Aldar or Sorouh can afford it. Not private ones."
Mr Ahbabi conceded that the price of land made it very difficult for developers, and that free land remained a key factor for affordable housing. "We will help developers get access to free land," he said. While almost all the land inside the city of Abu Dhabi has already been allocated, there is still some in the Capital district. Stretching over 5,000 hectares - nearly the size of Abu Dhabi Island - the district is expected to house between 300,000 and 350,000 people and include federal government institutions, embassies, a university, sport facilities and a military site.
Mr Ahbabi said the master plan for the community would be completed in November and the project launched in January: "It will have high-end areas but cater for mid-income people as well." Meanwhile, the Government is also negotiating with developers to include housing for low and mid-incomes in their projects. "We are pushing on all directions: Saadiyat Island, Reem Island, Sowwah Island where the financial centre will be, Al Raha Beach, Yas Island, Hydra, Al Reef, Masdar, Al Ghadeer, Lulu Island, everywhere," Mr Ahbabi said.
The UPC has already said it would issue binding guidelines for developers to address housing demand from mid-income families in Abu Dhabi by the end of the year. The department of planning and economy has recommended a minimum of 20 per cent of all projects be reserved for affordable housing. Developers say they intend to work closely with the UPC. "As a responsible company we recognise that we need to cater for everybody's aspirations, and pocket," said Ronald Barrott, chief executive of Aldar.
"We want to integrate this with our other housing. It's one society. We don't want to segregate. "Inflation is our main enemy right now; it's taking most of our time," Mr Ahbabi said. "The growth of the economy is massive in every sector and we have to run to catch up. "We want to focus on adding more supply, that's the only solution. Within three and a half years, we will be in a good situation to match up supply and demand."