One of the companies advising the Abu Dhabi Urban Planning Council on its strategic vision has warned that rising rents could hamper city's ability tp complete.
JLL, which, along with Arup, Mace and Oxford Economics, is currently advising the Abu Dhabi Government on revising its over-arching strategic plan for the capital, warned that rapid increases in rents could force low-paid workers out of the UAE and deter potential new residents from coming to live in the city.
According to JLL, prime residential rents in the capital rose 17 per cent last year and by a further 4 per cent during the first three months of this year prompted by an increase in employment, the Abu Dhabi decree requiring government workers to live in the capital and the removal of the rent cap.
JLL also highlighted the risk of an oversupply of homes in the longer term if short-term government construction contracts dry up and are not replaced by more sustainable private sector jobs.
“The danger is that there will be a big influx of people working on temporary jobs causing a big spike in the market over the next couple of years,” said David Dudley, the head of JLL’s Abu Dhabi office. “In order to have sustainable growth Abu Dhabi needs more long term jobs coming through. The market needs more housing to avoid a rent spike, which would be damaging to the city. But the message to developers is: don’t go crazy, and focus on the sorts of homes end users need so there isn’t an oversupply in the longer term.”
At the Cityscape property show yesterday in the capital a poll conducted by the broker revealed that about half of the people surveyed expected the next market correction to be between two and three years away.
JLL asked more than 100 delegates to vote via electronic keypads and reveal when they thought a correction would take place. Forty-nine per cent predicted it would occur between 2016 and 2017, while 32 per cent thought it would come between 2017 and 2018.
“It is difficult to judge the timing of the next market correction,” said Mr Dudley. “Property cycles happen and I think the people in this room believe that there will be a correction. The timing depends on a number of factors.”
Follow us on Twitter @Ind_Insights
Read more: http://www.thenational.ae/business/industry-insights/property/abu-dhabi-warned-rising-rents-could-drive-low-paid-workers-out-of-uae#ixzz2ziEnPkeF
Follow us: @TheNationalUAE on Twitter | thenational.ae on Facebook