Abu Dhabi creates housing body, may help sector restructuring

Stanley Carvalho
Reuters Middle East

ABU DHABI, Dec 20 (Reuters) - Abu Dhabi has set up an

authority to develop mass housing as it pushes ahead with social

welfare initiatives, in a move that could spur restructuring of

the emirate's real estate sector.

The Abu Dhabi Housing Authority was established by United

Arab Emirates President and Abu Dhabi ruler Sheikh Khalifa bin

Zayed al-Nahayan, state news agency WAM said late on Wednesday.

It will develop housing programmes, outline rules and

regulations for housing and create a database of applicants for

loans, plots of land and low-cost houses, making review of

applications easier.

Sheikh Hazza bin Zayed al-Nahayan, national security advisor

and brother of the ruler, will chair the body, which will report

to the Abu Dhabi Executive Council but have financial and

administrative independence, WAM reported.

Abu Dhabi has boosted welfare spending for its citizens over

the last couple of years, partly to avert any social discontent

during Arab Spring uprisings elsewhere in the Middle East.

A property analyst at an Abu Dhabi-based bank, who declined

to be named because of the sensitivity of the issue, said the

housing authority could help the government restructure the

residential real estate sector, which has been hit in the last

few years by oversupply and a steep fall of prices.

One major plank of the restructuring is a planned

state-backed merger between Abu Dhabi's two biggest real estate

developers, Aldar Properties and Sorouh Real Estate Co

. The merger talks were originally announced in March

but a final agreement has not yet been reached, apparently

because of disagreements over valuations.

The merger could help to support Abu Dhabi real estate

prices by cutting back excess new supply and permitting better

coordination of projects.

"The new housing authority is a further consolidation of the

real estate sector and helps to put all the pillars together,"

the analyst said. "It is positive for Aldar and Sorouh, who can

expect more contracts to develop housing."

Before the property crash many developers focused on

high-end residential projects, but with the developments that it

sponsors, the government has been shifting the industry's focus

towards middle- and lower-income housing.

(Editing by Andrew Torchia)

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