'Live Local' Rule Gives Major Boost to Abu Dhabi Property Market
A new rule requiring all public sector workers to move to the capital city is expected to provide a major fillip to the Abu Dhabi property market.
The rule, which became effective on Sunday, was introduced by the Emirate in an attempt to drive profits in the market up.
A rise in demand for housing units in the past few weeks has been observed, noted leading real estate company Cluttons.
Reports have emerged that the Emirate is prepared to make exceptions to its policy requiring all public sector employees to live inside Abu Dhabi, though an expected 20,000 employees living outside of the city are expected to invest in local property.
Cluttons noted that the city's real estate sector is already experiencing an upturn, following the Executive Council's outlined five-year financial investment of Dh330 billion (£57 billion).
"The impact of the Executive Council of Abu Dhabi's planned financial injection into the Emirate's economy over the next five years has been designed to stimulate economic growth and to promote economic diversification," Cluttons said.
"It is expected to act as a catalyst not only for growth within the Emirate, but the broader UAE as well, with the nation's foreign direct investment, or FDI, appeal expected to receive a further boost."
The Department of Economic Development's 'Business Cycle' shows a rise in the number of new business licenses issues and an increase in the number of people employed throughout the city in Q1, prompting optimism for further market development.
Sparked by anticipation for the new rule, as well as other positive factors, prime residential property prices in Abu Dhabi have increased by 5-6 per cent in Q2 2013, said Cluttons.
Steven Morgan, Head of Cluttons Middle East, spoke of the positive impact of the government's new requirement. "We expect that the ruling, which came into force on Sunday for 20,000 public sector workers and their families, will continue to place downward pressure on vacancy levels. At the same time, this will bolster residential rental and capital growth rates, particularly in submarkets that provide easy access to Abu Dhabi Island and the lifestyle offered by Dubai."
“Al Raha Beach is a prime example of this and we have already seen rents rise by close to 15 per cent during the second quarter. This rise has been fuelled in part by tenants wishing to secure suitable accommodation ahead of the deadline and also by new job starters moving to the capital, particularly in the education, healthcare and hospitality sectors,” he said.