Monday, August 25, 2008

UAE house rents surged 17.5 percent in 2007

With inflation at its peak, house rents and associated services in the UAE, has surged by 17.5 percent last year.

The rents increased by 18.8 percent, while other associated services and products, including housemaids and furniture got dearer, except the heavily subsidized power supply and water, which either stabilized or declined.

The figures released by the Ministry of Economy last year, revealed that 2007 was the best year for UAE, in terms of economic growth and revenues. But it was also one of the worst years in terms of inflation, which soared by 11 percent.

The UAE attributes the increase in food prices and rents as the main factors behind inflation, apart from the higher import bills due to decline in the value of US dollar.

Although, the high food prices has been considered mainly due to surge in global farm costs, the strong demand generated by the economic boom, coupled with mounting fuel and construction costs, have pushed costs of rents and other housing services forwards.

The Ministry of Economy reports that house rents and other associated items saw an increase of 17.5 percent in 2007, which is far higher than 12.5 percent growth in 2006. Rents along saw an increase by 18.8 percent, while the prices of furniture and other other services increased by 13 percent in 2007.

Water and electricity prices were the only relief, as water rates continued to remain stable due to heavy government subsidies on water supply for domestic use, while electricity rates declined by 5.5 percent.

The Ministry reports inflation in the UAE at 11.1 percent in 2007, attributing soaring rents and food prices to be the major cause.

The major oil-producing emirate, Abu Dhabi, saw the maximum inflation rate of nearly 11.6 percent, followed by Dubai and Sharjah.

It has been revealed that UAE was the second highest in inflation levels in the GCC, next to Qatar, which had recorded 13 percent. The inflation rate of UAE was thrice that in Saudi Arabia, and four times that in Bahrain.

Economists are expecting inflation to continue to remain high even this year, with the rising rents and food prices. UAE, which is heavily dependent on imports, has increased in value and quantity due to upsurge in regional business, and the peg between the Dollar and UAE Dirham.

No comments: