ABU DHABI, Sept 13 (Reuters) - Abu Dhabi is pressing its
public sector employees who reside outside the emirate to
relocate within its borders, a policy which analysts say aims to
address heavy oversupply in its real estate market.
"Employees residing outside the emirate will not be eligible
for the housing allowance" provided to workers in state
institutions, the government said in a circular dated Sept. 12
and seen by Reuters.
The policy takes aim at people, believed to number many
thousands, who commute to work in oil-rich Abu Dhabi while
living in the neighbouring emirate of Dubai because of lower
rents there or a lifestyle which they see as more comfortable.
The new rule, which will take effect after a year, will
apply to citizens of the United Arab Emirates as well as
foreigners who are working in Abu Dhabi for the government and
all its wholly owned entities and companies, the circular said.
It said employees should live in Abu Dhabi "to avoid traffic
and road accidents", an apparent reference to the risks of
commuting on the 130 kilometre (80 mile) highway through the
desert between Abu Dhabi and Dubai, which is packed with cars at
However, analysts said the policy appeared designed to help
absorb a large supply of new high-end homes that is set to enter
the market in Abu Dhabi this year. Property prices in the
emirate have tumbled about 50 percent since the global financial
crisis hit the market several years ago, analysts estimate, and
the new supply threatens to undermine them further.
"Many new units have come up in Abu Dhabi, reaching the peak
of its development cycle. The move is to create new demand and
make sure the vacancy rates don't reach high levels," said
Matthew Green, research head at consultants C.B. Richard Ellis.
David Dudley, director of operations for the Middle East and
North Africa at Jones Lang LaSalle, said: "This is a positive
move for Abu Dhabi's property market that will help create
demand for housing where there's oversupply."
Analysts were unable to provide a precise number for Abu
Dhabi government employees living outside the emirate, but two
years ago, the number was roughly 20,000, one analyst estimated.
Government officials in Abu Dhabi were not immediately
available to comment on the policy. The government is a major
employer in Abu Dhabi and several state-owned companies, such as
Etihad Airways, already had such a policy in place or were
considering whether to adopt it.
Earlier this year the Abu Dhabi government said it was
considering a proposal for a state-backed merger of the
emirate's biggest two property developers, Aldar Properties
and Sorouh Real Estate, after they were hit
hard by falling property prices.
Abu Dhabi, the capital of the UAE, had a population of
nearly 2 million in 2010, according to the Abu Dhabi Statistics
Centre; most residents were workers from other countries.