Monday, September 17, 2012

New housing allowance rules for public sector employees in Abu Dhabi

The Abu Dhabi Executive Council has passed a law that mandates public employees to reside in the capital, and this may be a boost to local economy, while the rents are likely to surge in the capital, experts said.

There are more than 10,000 employees in local departments, government-owned companies and public authorities, who will be affected by the new rule. These employees currently draw a salary of Dh.1.5bn to Dh.2bn in the form of annual housing allowances, and they are not eligible to claim this, if they do not reside in Abu Dhabi.

In fact, the decision may also affect prices in other related sectors, apart from rentals, said Dr. Mohammed Amerah, an Abu Dhabi-based economist.

The General Manager at the Abu Dhabi office of Asteco Property Management, Paul Maisfield, mentioned that after a year, rental prices are likely to grow based on the number of people who decide to move to Abu Dhabi. 

Real estate officials have estimated that nearly 11000 new units will be completed towards second half of this year, with majority of these being high-end apartment buildings, which would serve high-income residents and increase vacancies in low-grade assets.

The move received mixed response from public in the capital. While some said that it is a violation of principle of equality among nationals in the UAE Constitution, others said this may help to reduce traffic snarls and improve workplace productivity and ensure a balanced property market.

The decision was issued last week, with approval of Dr. Ahmad Mubarak Al Mazroui, Secretary General of the Abu Dhabi Executive Council, to change human resources policies pertaining to accommodation of Emirati and foreign employees, and take necessary measure to ensure that they reside in Abu Dhabi.

The decision states that employees living outside Abu Dhabi for any reason will be deprived of their housing allowances, and they cannot avail the allowances directly or indirectly for any reason. The decision grants a grace period of one year for employees to adjust their legal status.

The decision, however, states that workers of offices of Abu Dhabi local departments with offices located outside Abu Dhabi will be exempted from the rule.

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