Tuesday, October 07, 2008

Housing shortage in Abu Dhabi likely to shoot up rents, inflation

A shortage of about 28000 housing units in Abu Dhabi is likely this year, with the rents forging up, adding to inflation in the UAE capital.

The current projects that are nearing completion will form only 20 percent of the required housing.

As per the report from Chamber of Commerce, the shortage in housing units will lead to increase in rents, which constitute the largest portion of consumer spending and is estimated to be not more than 40 percent, leading inflation to reach its maximum heights, the report said.
The report said that the housing crisis is gaining momentum, with the total demand for units bound to rise by 70,000 towards 2010.

According to a senior official, Abu Dhabi is considering a possible lowering of annual cap on rent increases (from 5 percent to 3 percent) for properties.

Inflation in Abu Dhabi touched 12.9 percent during the second quarter, from 11.5 percent during the first quarter. This is as per the preliminary data by the Abu Dhabi Planning Department last month.

The body then retracted the data, saying that it was working on new consumer price index. Dubai has introduced an annual rent cap of 5 percent this year.

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